150A Andover Street Suite 2 Danvers, MA 01923

978.777.6554
iba@ipswichfinancial.com
Client Login
Ipswich Bay Advisors Home
Ipswich Bay Advisors Home
  • Home
  • Home
  • About Us 
    • Our Mission
    • Ipswich Bay Advisors in the News
    • Our Pledge
    • Our Team
    • Ed Slott Master Elite IRA Experts
    • Research-Based Investing
    • Ipswich Bay Advisors In the News
  • Services 
    • Retirement Planning
    • Tax Planning
    • Investment Management
    • Financial Planning
  • 401k Business Services 
    • Advisory and Management Services
    • Employee Education
    • Plan Sponsors
    • Participants
  • Events
  • Blog
  • Resources 
    • Monthly Webinars
    • State of the Market
    • The Daily IRA Q&A
    • Tax and IRA Related Newsletters
    • LPL Research
    • Videos
    • Your Personal Retirement Machine
  • Contact Us
Client Login
Insurance Read Time: 3 min

How Insurance Deductibles Work

An insurance deductible is the amount you, the insured, pay before any claim is paid by your insurance carrier. Depending upon the type of insurance, a policy may set the amount of deductible, or offer you the ability to select a deductible amount.

Deductibles serve a dual purpose: they save the insurance company money (including the administrative cost of processing small claims) and may help keep your premium costs lower.

Choosing the Right Deductible Amount

Generally speaking, the trade-off between deductible levels and insurance premiums is simple: The higher the deductible, the lower the cost of insurance. Conversely, the lower the deductible, the higher the cost of insurance.

Deciding how to make that trade-off is a function of math and your own comfort level with higher out-of-pocket costs if you choose a higher deductible.

Only you can decide if saving $65 a year in premiums for a deductible that is $500 rather than $200 is worth it to you. You may find that the relationship between deductible amount and premium cost is different depending upon the type of insurance. For instance, the savings with a higher deductible may be significant with auto insurance, but much less so with homeowners insurance.1

Not only will this relationship between deductibles and premiums differ based on insurance type, but it may differ based upon other factors, such as your age and the value of your car, for example.

When you consider the appropriate deductible level for health insurance coverage, remember that deductibles may be on each member of the family.

When shopping for insurance, you should always ask your insurance agent what the premium costs are at each of the available deductible levels. Knowing that information may help you make a sound decision regarding your coverage.

1. For illustrative purposes only. This example is not meant to indicate any actual relationship between deductible amount and insurance premium cost.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Have A Question About This Topic?

Thank you! Oops!

Related Content

Inventorying Your Possessions

Inventorying Your Possessions

Creating an inventory of your possessions can save you time, money and aggravation in the event you someday suffer losses.

Critical Estate Documents

Critical Estate Documents

Sound estate management includes creating financial and healthcare documents. Here's an inside look.

Do Your Kids Know The Value of a Silver Spoon?

Do Your Kids Know The Value of a Silver Spoon?

You taught them how to read and how to ride a bike, but have you taught your children how to manage money?

Contact

Office: 978.777.6554

Fax: 978.777.6560

150A Andover Street

Suite 2

Danvers, MA 01923

Series 6, 7, 24, 26, 63, 66

iba@ipswichfinancial.com

Quick Links

  • Retirement
  • Investment
  • Estate
  • Insurance
  • Tax
  • Money
  • Lifestyle
  • All Articles
  • All Videos
  • All Calculators
  • All Presentations

Check the background of your financial professional on FINRA's BrokerCheck.

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named representative, broker - dealer, state - or SEC - registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

We take protecting your data and privacy very seriously. As of January 1, 2020 the California Consumer Privacy Act (CCPA) suggests the following link as an extra measure to safeguard your data: Do not sell my personal information.

Copyright 2023 FMG Suite.

Securities and advisory services offered through LPL Financial, a registered investment advisor. Member FINRA/SIPC.   

Ed Slott is not affiliated with LPL Financial and Ipswich Bay Advisors.