What is a deductible in the context of health insurance?

Prepare for the Maine Life Insurance Test. Use flashcards and multiple choice questions with explanations. Get exam-ready now!

In the context of health insurance, a deductible refers to the amount that the insured must pay out of pocket for healthcare services before the insurance company begins to pay its share of costs. This means that until the individual has paid the specified deductible amount, they are responsible for covering all medical expenses. Once this threshold is met, the insurance policy typically kicks in to cover additional eligible expenses according to the terms of the policy.

This structure encourages individuals to be mindful of their healthcare spending and to use insurance benefits more judiciously. It also helps insurance companies manage risk and costs by sharing a portion of the financial burden with policyholders at the outset.

Other concepts like the total payment an insurer makes for a claim, the percentage of costs shared by the insurer, and the limit on how much a policy will pay annually pertain to different aspects of health insurance policies, such as claim payments, co-insurance, and annual maximums, respectively. These definitions are distinct from the concept of a deductible.

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