Why does having a higher deductible lower your insurance premiums? This question often remains in the mind of many people, so in today’s article we are going to talk to you on this topic. And whatever is the reason behind this, we will explain them to you in a very easy way, so stay tuned till the end of the article.
First of all let us explain to you what is the meaning of high deductible amount in the insurance policy. Let us consider this as an example so that you can understand easily.
“Suppose you have selected a $500 deductible in your car insurance policy and when the total loss of your car in an accident becomes $2000, first you will have to pay $500 yourself and the remaining $1500 will be paid by the insurance company.”
why does having a higher deductible lower your insurance premiums?
why does having a higher deductible lower your insurance premiums There are some reasons for this, let us now understand them.
Reduction of financial risk for the insurance company
Friends, whenever we choose more deduction in the insurance policy, the amount of insurance premium gets reduced. We will give you an example so that you can understand it better. “Let’s say you opt for a $2000 deductible on your health insurance policy. And whenever you fall ill in the future and the medical bill is $5000, you will have to pay $2000 yourself and the remaining $3000 will be paid by the insurance company.”
Now from this example you can understand how the insurance company had to pay only $3000 out of $5000, due to which the insurance company got financial savings. Therefore, whenever the higher the deductible you choose in the insurance policy, the lower will be the amount of your insurance premium.
Responsibility
Whenever we choose a high deductible in an insurance policy, we know that if we suffer any loss that falls within our deductible amount, the insurance company will not pay it. And even if there is a huge loss, we know that whatever our deductible amount is, we will have to pay it ourselves. Because of which the customer always tries to avoid loss and never becomes negligent thinking that the insurance company will pay for whatever loss we incur.
Due to responsibility, the possibility of loss to the customer is significantly reduced, hence one of the reasons is that when we choose higher deductible amount in the insurance policy, the amount of insurance premium is less.
Attracting new customers
Due to the reduction in the premium amount due to choosing higher deductible in the insurance policy, there are many new customers who like it very much. And due to which many new customers are also attracted to this policy of the insurance company.
So friends, we hope that you have got the answer to the question Why does having a higher deductible lower your insurance premiums and if you have any doubt related to this then you can ask me by commenting.
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