How to Choose the Right Deductible for Your Visitors Insurance Policy
Before buying visitors insurance, there are a few things you should know about insurance deductibles. The deductible is the amount the policyholder must pay out-of-pocket before the insurance begins to pay for covered benefits. For example, if you choose a $500 deductible and receive a $1,500 medical treatment, the $500 deductible is your liability. Only after you pay the $500 deductible, the insurance company will cover the remaining $1,000.
Deductible Per Incident vs. Deductible Per Policy Period
Depending on the visitors insurance policy you buy, you will either have a per incident or per policy period deductible.
With a per incident deductible, you must pay the deductible once per illness or injury. This means that even if you require multiple services for one incident, you only pay the deductible once. For example, if you get the flu and visit a doctor, who prescribes you medications, you only have to satisfy the deductible once for the insurance company to cover both the doctor visit and the prescribed medications.
Deductible per policy period, or annual deductible, requires that you satisfy the deductible once for the duration your policy is in effect, up to one year. A policy period that exceeds one year requires that you pay the deductible again after the one-year mark. This means that no matter how many incidents happen over the course of your policy period, you only have to satisfy the deductible once.
Deductible and Premium
The deductible you choose affects your policy premium. The policy premium is what you pay to purchase a plan. If you select a high deductible, your premium may be very low. If you select a low deductible, your premium will be more expensive. Some buyers may be inclined to go with a high deductible to lower their policy cost, but this may not be the best idea as a high deductible means you may pay much more if you end up having to use your insurance.
For example, with a $500 deductible, the premium may be $400 for one month. If that deductible is reduced to $250, the premium increases to $455. It is recommended to choose the lower deductible; the $55 difference in premium cost is not as significant as the $250 savings in the case that you need to use the plan benefits.
Which Deductible Should I Choose?
You should choose a deductible that you are comfortable with, but remember that choosing a higher deductible to lower your premium will have you paying more when you need to use your policy benefits because deductible is one of the factors that affect the cost of visitors insurance. When purchasing visitors insurance, most buyers select a deductible between $250 and $500 for comprehensive insurance plans and a $50 deductible for limited insurance plans.
It is advised not to select a $0 deductible. The premium will be very high, and you may not even end up using the insurance.
Remember, the deductible only applies if you use your insurance. If you never need to use your visitors insurance policy, you will not need to satisfy the deductible. Only when you require treatment will it be necessary to satisfy the deductible.