Even a ‘voluntary deductible’ for which you get a discount in premium is not free what you are getting
Even a ‘voluntary deductible’ for which you get a discount in premium is not free what you are getting
Continuing cover note’s list of insurance terms that are not exactly what they appear to be a mixed bag here.
When an insurance policy offers a ‘deductible’, it sounds good to you. However, it is not at all. Even a ‘voluntary deductible’ for which you get a discount in premium is not free what you are getting.
Deductible is a portion of a claim that the insurance company will not pay. This will be specified as a percentage of the claim, or an equal amount in each claim, and you must submit that amount yourself. A deductible is a mandatory clause in some policies. Some policies also allow you to opt for a voluntary deduction for premium waiver.
You get what you pay for, and hence, be cautious that premium waiver means claim waiver. As I have asked earlier in the cover note, premium is expensive or claim?
The deductible is also called an ‘extra’, and of course can be a ‘voluntary excess’ as well. The common meanings of these words indicate benefits for you, but now you know what they are.
Deductibles are commonly found in motor, health and property (fire, theft) policies which are indemnity policies; i.e. they reimburse your actual expenses/losses.
Benefit policies like life insurance policies, annuity policies, critical illness, personal accident and, in fact, liability policies do not have deductibles.
Now for a word that sounds bad for you, really terrible, but it’s not. Indeed, in the midst of a great loss it is your pleasure. Creative total loss. When you hear this term when your car insurance policy is being settled, do not write down a car that is at the bottom of your local lake or river, or crushed under a large tree that fell in a previous cyclone.
This does not mean that the insurance company is shunning you. What this is saying is that retrieving and repairing your car is so expensive, that they are going to pay you the cost of a similar vehicle.
As they say, in every life there is bound to be some rain.
Some words are bad and some are good and some can mean the opposite of them. But some insurance terms have slightly different meanings.
‘different meanings’
A benefit policy, as we saw above, is one that has a pre-determined flat amount that you can claim on the occurrence of the insured event. If someone is diagnosed with cancer, the sum assured is paid. If an accident occurs, the sum insured is paid. This is all regardless of actual expenses.
In your hospitalization insurance, there is a cover for domestic hospitalization. This has brought much premature happiness to those who are considering the policy. Just wait, that doesn’t mean paying for your cough and cold. In other words, this home remedy aka outpatient treatment is not insurance.
Domiciliary hospitalization refers to treatment in a hospital given at home. It should be recommended by the treating physician for reasons including paucity of hospital beds or medical unsuitability to transfer the patient to the hospital.
The clause was invoked during the peak case load period of the COVID-19 pandemic, when treatment at home as well as in make-shift facilities was the only option for thousands of patients as hospital capacity was enormous.
Let us end this installment of the cover note with something that means exactly what it says. Yes, there are too!
An auto-reinstatement clause, which may appear in a property insurance or health insurance policy, means: When part or all of the sum insured is used on payment of a claim, the original policy coverage amount is restored. given, or topped up. , usually only once in a policy year. This is a good clause for your health policy because coverage is not easy to obtain and the cost of health care, which is already high, can explode in some cases and you will not be denied coverage.
(The author is a Business Journalist, specializing in Insurance and Corporate History)