Insurance rates and deductibles are used in a variety of insurance types.
Whether it is health insurance or your car insurance, you probably have heard the terms deductible and rates a hundred times over. However, what you might wonder is how your deductible affects your overall insurance rate. This does greatly depend on your company, the kind of insurance you have, and even what other kinds of insurance you have with the company. Typically, there is a direct connection between the deductible and your rates, also known as your premiums.
What is a deductible?
Whether you are looking at health or auto insurance, the deductible is the amount of money you have to pay when service is required. If you have a $500 auto deductible, you have to pay $500 of the first amount of repairs and the insurance company takes care of the rest. For health insurance, you might have a deductible for certain trips, such as general visits to the doctor, where you pay a flat $20 deductible, and the insurance company covers the rest. You might have a set amount you have to pay for, and then the insurance company covers you for the rest of the year.
Regardless, the deductible is an amount of money you have to pay for services before the insurance money kicks in, and your insurance rate is the amount of money you pay monthly, quarterly, or annually (however your bills are set up), in order to keep your insurance active. Changing your deductible does, generally, have an impact on your insurance rate.
What if I want to lower my deductible?
Sometimes there is nothing more frustrating than being involved in a car accident, yet you have to pay out of your pocket the $500 that you just can't afford at the time. To change this, you might want to look at lowering your deductible. Perhaps you want a deductible that is $250, or even $100. Perhaps you don't even want a deductible at all. You simply want the insurance company to handle it. The lower you want your deductible payment to be, the higher your insurance rate is going to be. So, by paying more for your monthly fee (or however often you are billed), you should see a lower deductible.
On the flip side, if you want to reduce your monthly payments to the insurance company, your deductible is going to increase. Ultimately, you have to decide when you want to pay the money. You can either pay more monthly and less in the event of an accident with your car (or medical treatment), or you pay less monthly and see your deductible increase. It really is all up to you.
If you want to change your deductible, you just need to contact your insurance company, and they will tell you what your monthly premium rate is going to be, depending on the change you want to make.
