What is the difference between insurance premium and deductible

Essentially, this is often the best choice for someone who will probably not need enough health care to benefit from meeting the deductible and out-of-pocket limit sooner. On the flip side, insurance policies with high monthly premiums but lower deductibles are usually a good choice for those who need consistent care. Although they are spending more on a monthly basis, it will take them a shorter amount of time to reach their annual deductible since they have higher medical expenses.

Once they hit that deductible amount, insurance plan cost-sharing begins in earnest. This means fewer out-of-pocket consumer costs—and getting the policyholder closer to reaching the out-of-pocket maximum, at which point the policyholder will still pay the monthly premium but the health insurance company pays the entirety of all eligible medical costs. Still not sure which plan is right for you? Ask yourself how often you go to the doctor. But if you are relatively healthy and you only plan to use preventive care that year, which is free under the Affordable Care Act ACA , a higher deductible might be the right choice.

Those who are older—and especially those with more health issues—will tend to pay more for a plan with less out-of-pocket exposure. Consider opening a health savings account HSA , which is a way to set aside money tax-free for healthcare costs. Regardless of which plan you have, SingleCare coupons are also a way to save on prescription drug costs.

Register new account Pay your bill. Get your ID cards. Updated: October If you have an insurance policy, you've likely heard of premiums, deductibles and limits. Here's a guide to help you understand these terms. Get a quote Find an agent. Factors That May Affect Your Homeowners Insurance Premium Coverage limits you choose Deductible amounts Optional coverages you select Your home's age and condition Your claims history Your credit rating Type of home construction Local fire protection Discounts for deadbolt locks, alarms or insurance bundling Source: National Association of Insurance Commissioners NAIC Check with your insurer to see whether you qualify for home insurance discounts to help reduce the cost of your policy.

Insurance deductibles are the amount of money you pay out of pocket toward a covered claim. For example: Homeowners insurance You'll likely want to consider a number of factors when choosing your homeowners insurance coverage limits.

Auto insurance Typical auto insurance policies include separate limits for different types of coverage, such as: Auto liability coverage : Each state sets minimum liability limits that all drivers are required by law to purchase. You answered out of correct! Need help reading your policy? Ask an agent! Or, brush up on more insurance basics. Find an Agent. This content is for informational purposes only and may not be applicable to all situations.

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Location data not available. Trying to determine your annual health care costs? There are several pieces of the cost puzzle you should take into account, including your premiums, deductible, coinsurance and copay. Below is an explanation of each and examples that show how people use them to pay for health care.

A premium is like your monthly car payment. You must make regular payments to keep your car, just as you must pay your premium to keep your health care plan active. A deductible is the amount you pay for coverage services before your health plan kicks in.

After you meet your deductible, you pay a percentage of health care expenses known as coinsurance. It's like when friends in a carpool cover a portion of the gas, and you, the driver, also pay a portion. A copay is like paying for repairs when something goes wrong.

What is a premium? Premiums are regular payments to keep your health care plan active. Higher premiums usually mean lower deductibles. An example of how it works: Trisha, 57, plans on devoting herself to her three grandchildren after she retires. The plan premium, or cost of coverage, will be taken out of her paychecks. Even though her new plan has higher premiums, the deductible and copays will be lower.

Read more about how health plans with higher premiums often have lower deductibles. Her new plan will keep out-of-pocket costs predictable and manageable because as a former smoker with breathing problems, she needs to see doctors and specialists regularly. What is a deductible? A deductible is the amount you pay out-of-pocket for covered services before your health plan kicks in. An example of how it works: Courtney, 43, is a single lawyer who just bought her first home, a condo in Midtown Atlanta.

She loves that her building has a gym and pool because she likes to stay in shape. When she felt a lump in her breast during a self-exam, she immediately had it checked out. Learn how you can save money with a health savings account. What is coinsurance? Coinsurance is the percentage of the bill you pay after you meet your deductible. An example of how it works: Ben, 28, is a security expert living in suburban Philadelphia with his wife and two small boys.

Their 3-year-old recently fell at the playground and broke his arm. Find out how hospital plans can help you cover costs before you meet your medical deductible. An example of how it works: Leon, 34, is a married forklift operator from Jacksonville, FL. His Primary Care Physician referred him to an orthopedic surgeon. Having these set fees gives Leon peace of mind since he and Leah are saving to buy a kayak.