A bit of definition before
Sum Insured: Maximum amount that the insurer would spend for illness.
Deductible: It is the first amount paid by the insured in illness or accident. The deductible is fixed and is defined when contracting the policy.
Coinsurance: It is the second amount paid by the insured for an illness or accident. It is variable. It is represented as a percentage, generally 10% of the illness (after deducting the deductible).
Coinsurance Cap: It is the maximum limit that the coinsurance can reach, to limit the expense in a catastrophic illness.
Practical case.
An insured person feels bad, goes to the doctor, and spends on consultation.
The doctor asks for studies and spends in the laboratory.
He asks for medicine and spends it at the pharmacy.
Hospitalization is required, and it spends stay, operating room, nurses, medical fees for the intervention.
All these expenses added are the TOTAL of the disease. Let’s see how it behaves if the total is $100,000. What if it were $1,000,000?
DATA OF THE CONTRACTED POLICY
Sum assured 50,000,000
Deductible 15,000
Coinsurance 10%
Coinsurance Cap 50,000
CONCEPT EXAMPLE 1 EXAMPLE 2
Illness 100,000 1,000,000
Deductible 15,000 15,000
Subtraction 85,000 985,000
10% coinsurance (capped) 8,500 50,000
In charge of the Insurer 76,500 935,000
Payable by the Insured
Deductible plus coinsurance 23,500 65,000
If you ask yourself, which comes first, the deductible or the coinsurance? The answer is the deductible. Once the deductible is subtracted from the cost of the illness, the percentage coinsurance applies.
If we compare the coinsurance from Example 1 and Example 2, we see that if the illness is less expensive, the coinsurance is less.
So no matter how severe the illness, your expense will not be greater than the deductible ($ 15,000) plus the coinsurance cap ($ 50,000), giving a total of $ 65,000 in this example 2. Even if the medical expense is 1 million or 10 million, the insured will only spend $65,000.
What is the Deductible?
Remember that in all insurance you will always have to pay a fixed part at the time of illness. The deductible is the first amount to pay. The lower the deductible contracted, the greater the chances that you can claim a claim, and the insurance is more expensive. On the other hand, with a higher deductible, there will be fewer claims that you can claim and your participation will be higher, so the cost of insurance is lower.
In other words, if you contract a deductible of $15,000, the insurance will be broader and with a higher cost than if you do it with one of $ 30,000 and even less with one of $50,000. However, in an illness, the outlay that you will have to make will be greater.
At young ages, raising the deductible changes the cost very little, so it is advisable to keep deductibles lower. However, at older ages, increasing the deductible means a reduction in premiums that may be important and necessary.
In the event of an accident, some plans contemplate the elimination of the deductible.
What is the Coinsurance Cap?
A concept as important as coinsurance is the COINSURANCE CAP. Generally, a maximum limit to be paid for coinsurance is established as $ 50,000 pesos. This limits the insured’s expense in the event of a catastrophic illness.