Definition
Deductible (Health)
A health deductible is the fixed amount a policyholder must bear before the insurer starts paying, used heavily in top-up and super top-up plans.
In a top-up or super top-up policy, the deductible is the threshold above which the cover responds: the policyholder funds (often via a base policy or savings) the first slice, and the top-up pays beyond it. A higher deductible sharply lowers the premium.
Deductibles are a form of risk retention that filter out small claims, letting insurers offer large catastrophic cover cheaply. The crucial design point is whether the deductible applies per claim (plain top-up) or across the year's aggregate claims (super top-up), which determines real-world usefulness.
Related terms
- Super Top-UpA super top-up health policy provides extra cover above a chosen deductible, applying the deductible once across all claims in a policy year rather than per claim.
- Top-Up CoverA top-up health cover provides additional sum insured above a fixed deductible, but the deductible applies to each individual hospitalisation claim.
- Risk RetentionRisk retention is consciously bearing a risk oneself rather than transferring it, by paying for any losses out of one's own resources.
Plain-English explainer from The Dispatch Investors Encyclopedia. General information, not financial advice.