Anyone who has ever considered or bought international health insurance can be forgiven for not fully understanding all the product features and benefits, medical definitions and underwriting terminology. Health insurance is a complex product and the thought of reading and trying to understand the policy wording and small print can be daunting. Being clear on the key technical terms before purchasing insurance cover will allow you to make informed choices and work with your broker to secure the cover that’s right for your needs.
This week, the Riviera Expat blog is looking at excesses and deductibles – two terms that can make a big difference to the level of cover you receive and the premium you pay.
What is an excess in an international health insurance policy?
If there is an excess on your policy, each time you claim for treatment during the policy year you’ll need to pay the excess amount out of your own pocket – and the insurer will usually pick up the remainder of the cost. So, for example, if you have an excess of €100 on your policy and your medical treatment costs €2,000, you will need to pay the medical provider €100 and the insurer pays the remaining €1,900.
What is a deductible in an international health insurance policy?
A deductible by contrast is the upfront amount that you have to pay before your insurer will cover the cost of treatment (in your year of cover). So if you have opted for a £1,000 deductible, and your first two claims cost £500 each, you’ll need to cover all of these costs yourself. However, once you’ve paid out the £1,000, the insurer will cover the full cost of any subsequent treatment – even minor claims – until your cover expires.
It’s worth noting that some health insurance plans cover certain types of care, such as routine doctor’s visits and preventive care without enforcing a deductible. Also, the amount of deductible or excess can vary (or even be waived) if you are treated in one of your health insurer’s approved medical facilities. Ask your broker for more details if you are unsure.
What are the benefits of deductibles & excesses?
Excesses and deductibles provide a means for you, the customer, to reduce the amount of premium you pay for your international health insurance cover. At the higher-end of the spectrum, excesses and deductibles can act as ‘asset protection’ tools. Find yourself hit by a major medical event – perhaps evacuation and specialist treatment lasting weeks or even months is involved – and the cost could hit financially crippling levels. Take out a policy with a very high excess or deductible, your premium will be much more affordable and you’ll be safe in the knowledge that any significant medical costs will be covered.
However, whilst choosing a plan with a high deductible can reduce the premium it can also result in large out-of-pocket expenses. If your plan has a $10,000 deductible and you need a major operation you could end up paying the $10,000 yourself.
From the insurer’s perspective, excesses – and deductibles in the early period of a policy term – help deter smaller claims that can take up a disproportionately amount of administrative time, which is why customers who are prepared to entertain an excess on their policy can expect a healthy premium discount. It’s worth asking your broker to provide quotations with different excess levels to see what you can save. This is especially true if you can comfortably cover payments of $100 or $200 for minor treatment.
Excesses and deductibles have existed across most forms of insurance for years. As a customer, they can be an important tool if you are looking to manage the cost of your cover or protect yourself against the cost of higher-end medical events that could otherwise leave you with financial difficulties. The effect on premiums and how deductibles and excesses are implemented do vary from insurer to insurer so it’s always worth clarifying with your broker.
