The Definition of the Insurance Premium Deductible

Insurance protects your assets, income and savings. It protects your family in case of your death by paying your funeral expenses, mortgage and debts. As you pay your insurance premiums on time each month, funds become available to help pay for unexpected tragedies. Ask your agent to help you understand your policy. Most insurance benefits include a deductible.

Deductible

• Money out of pocket.

  A deductible controls rising insurance premium spending by fixing an amount you will pay first in the event your need for health, auto or home care. If your deductible is $500, you will need to pay $500 before your insurance company will help pay your expenses.

Common Accident Deductible

• Major illness or injury.

  In the case of prolonged injury or illness, you must first pay your deductible amount before your insurance provider will cover your expenses. This applies per year, to you as an individual, and per family. You may have a family deductible provision on your major medical policy, however. If you have insured as a family and you have a family of five, for example, two or three deductibles will satisfy the deductible requirement for the calendar year for your entire family. This deductible is called the common accident deductible.

Corridor Deductible

• Bridge connects one side to another.

  You may supplement your basic health plan with a Supplemental Major Medical Policy. In the event you have a major accident or illness and the limits of your basic health plan are exhausted, a Corridor Deductible is used to pay the cost that go over and above your Basic Plan. You must pay the deductible amount you agreed to meet before supplemental coverage starts. The Corridor Deductible connects the two policies.

Calendar Year Deductible

• Calendar for the year.

  You may pay a Calendar Year Deductible with most Basic and Major Medical Policies. You must pay the specified amount you agreed to pay in the calendar year before your insurer will cover your medical bills for the rest of the year.

Vehicle Insurance Deductible

• Damage results to a car.

  Deductibles vary depending on the type of auto insurance. Your must pay the specified amount of money, or deductible, if your automobile is in a collision, has been stolen or vandalized or has caught on fire. After you have paid your deductible amount, your provider will cover your losses.

Low or Higher Deductibles

• Agents calculate the numbers for you.

  A lower deductible is not always wise. Deductibles can span a range of $100 to $10,000. Your monthly premiums will be lower if you set a high deductible. If you rarely visit the doctor, you may opt for the high deductible. However, remember this amount must be paid by you before your insurance provider will pay the rest of your expenses. You may prefer to pay a higher premium each month with a lower out of pocket deductible. Understand the benefits your insurance provides and the total expenses and deductibles you will pay in the event of accidents or illnesses.