How to Select the Best Insurance Deductible
Choosing an insurance policy can be tricky business because you're essentially buying insurance coverage for an event that may never occur. One of the major decision factors is choosing a deductible, or the financial amount you are responsible for paying before the insurance company covers the remaining claim amount. Choose an insurance deductible that meets your estimated personal needs and budget.
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Instructions
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Choosing an Auto Insurance Deductible
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Research your auto insurance policy choices to learn the exact figures for the monthly, quarterly, biannual or annual premiums along with their deductible amounts. For example, some common auto insurance deductibles are $0, $250, $500, $750 and $1,000. Most polices feature low premiums with high deductibles or high premiums with low deductibles. For example, a policy that costs $150 per month may have a deductible of $250, while a policy with a monthly premium of $75 has a $750 deductible.
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Review your overall monthly or annual budget along with your savings account. Figure out how much you can afford to pay in a monthly, quarterly, biannual or annual premium. Calculate what would happen to your savings account if you had to pay a high deductible in the event of an accident.
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Look at your past driving history. Consider how many major wrecks or minor fender benders you've been in the past few years. If you seem to be a target for accidents, consider a low deductible policy. If you have an excellent record and are a cautious driver, then you might be able to save money with a low premium and high deductible that you will, hopefully, never have to use.
Choosing a Health Insurance Deductible
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Research your health insurance policy choices to learn the exact figures for the monthly premiums along with their deductible amounts. For example, most health insurance companies offer PPO (preferred provider organization) and HMO (health maintenance organization) plan choices. PPO plans typically feature high monthly premiums and low deductibles, such as $250 monthly premiums with $500 deductibles, while HMO plans typically feature low monthly premiums and high deductibles, such as $150 monthly premiums with $1,500 deductibles.
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Review your overall monthly budget along with your savings account. Figure out how much you can afford to pay in a monthly premium. Calculate what would happen to your savings account if you had to pay a high deductible in the event of an accident or major illness or injury. Think about current monthly prescription costs and estimated doctor visit co-pays.
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Look at you and your family's recent health history, as well as your parents' health history. Consider how many illnesses or injuries you've had in the past few years. If you are healthy, live a healthy lifestyle and rarely get sick, then consider choosing a low premium-high deductible plan. If you have a fragile constitution or have kids that are exposed to a number of illnesses, then you may want to choose the higher premium-low deductible option. If you plan on trying to get pregnant during the year, you'll want to choose a low deductible plan to combat high medical bills.
Choosing a Property Owner's Insurance Deductible
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Research your property owner's policy choices to learn the exact figures for the monthly, quarterly, biannual or annual premiums along with their deductible amounts. For example, most property owner's insurance deductibles are $250, according to Insurance Tree. However, you may be able to pay a lower premium if you choose a higher deductible. Some property insurance policies have deductibles that are a percentage of your actual overall coverage amount; these feature low monthly payments but expensive out-of-pocket costs.
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Review your overall monthly or annual budget along with your savings account. Figure out how much you can afford to pay in a monthly, quarterly, biannual or annual premium. Calculate what would happen to your savings account if you had to pay a high deductible in the event of an incident or disaster.
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Consider the external environmental factors of your property's location. For example, if you live in a high-crime area, your home might be more susceptible to break-ins or vandalism. If you live in a coastal area and are at risk for hurricane or flooding damage, you may have to pay more in premiums for these types of areas, but this may not affect your deductible.
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