A deductible is the amount of money you must pay out of your own pocket before the insurance company starts paying for a claim.
Simple Meaning
A deductible is your share of the initial cost in a claim.
How It Works (Easy Example)
Suppose your health insurance has a ₹5,000 deductible and you get a hospital bill of ₹20,000:
- You pay the first ₹5,000 → this is the deductible
- The insurance company pays the remaining ₹15,000
Why Deductibles Exist
- To reduce small or unnecessary claims
- To keep insurance premiums lower
- To share risk between you and the insurance company
Types of Deductibles
- Fixed Deductible – a fixed amount you must pay every time
- Percentage Deductible – you pay a percentage of the claim
- Compulsory Deductible – mandatory (common in vehicle insurance)
- Voluntary Deductible – chosen by you (higher deductible = lower premium
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