Deductible

Explanations

The definition of a “deductible” is that expenses incurred within the agreed amount will not be compensated by the insurance company. Only after the customer has paid the full deductible amount themselves will the insurance company begin to reimburse expenses incurred thereafter.

Generally, the lower the deductible, the higher the premium. Some medical insurance products allow deductibles to be offset by the amount paid by social insurance or other commercial insurance products.

There are three common forms of deductibles:

1. Relative deductible: The insurance company will only pay out the full loss once it reaches the specified compensation starting point. Otherwise, no compensation will be paid.
2. Absolute deductible: The insurance company will not pay out for losses below the agreed amount, only paying out for the amount that exceeds it.
3. Total deductible: After the cumulative losses during the insurance period exceed the agreed total amount, the insurance company will pay out for the amount exceeding the deductible.

In commercial medical insurance, single-use or annual deductibles are the most common.

For example, a single-use deductible means that there is a deductible of RMB ¥xxx for each visit or a first-time hospitalization deductible of RMB ¥xxx, a second-time hospitalization deductible of RMB ¥xxx, etc. The annual deductible is similar to the total deductible mentioned earlier. After reaching the annual deductible within the insurance year, all subsequent expenses will be covered by the insurance company according to the agreed proportions.

Occurrence scenarios

Medical insurance, accident insurance that includes medical coverage, and other similar policies usually have deductibles, while lump-sum payout products such as critical illness insurance and life insurance typically do not have deductibles.

Examples

Client D purchased a pure inpatient medical insurance policy that has a total deductible of RMB ¥10,000, and the deductible can be offset by the amount reimbursed by medical insurance. During a hospitalization, the total medical expenses amounted to RMB ¥20,000, and medical insurance reimbursed RMB ¥5,000. Therefore:

Remaining deductible: RMB ¥10,000-RMB ¥5,000=RMB ¥5,000
Remaining total amount: RMB ¥20,000-RMB ¥5,000-RMB ¥5,000=RMB ¥10,000

The medical insurance policy will reimburse according to the proportion specified in the terms and conditions based on the remaining total amount.

key points

There are no "good" or "bad" levels of deductible, and it is necessary to consider your actual situation before making a choice.

Not all medical insurance products accept deductions from social security or other commercial insurance products, so the actual terms of the product should be consulted.

If you would like to learn more, please feel free to consult with our insurance advisors.