When you’re purchasing your insurance policy, you’re asked about deductible options. For example, on an auto insurance policy, they may ask you if you want a $500 or $1,000 deductible. I’ll bet a lot of you have questioned whether or not you want to spend more money before the insurance company pays out.
The reason for a deductible, in part, is to prevent numerous small claims from being made. If a claim is not much more than the deductible, the insurance company will surely pay it out, at the price of a higher premium on future renewals up to five years.
So why would there be an option for a higher deductible? What are the pros and cons of a high deductible?
Con: The biggest con, obviously, is paying out of pocket for this expense. That could put a damper on your mood.
Pro: A higher deductible makes for a cheaper monthly payment. You’ll be paying less overall, and if you don’t have to file a claim, the cheaper premium can be beneficial for you.
Con: Depending on your financial situation, it can be tough to come up with a higher deductible amount at the time of the incident.
Pro: Regardless of the higher deductible, it’s still less than what you would have been paying out of pocket without insurance.
Pro: If you a small claim, your insurance rates are going to go up. If something happens that would result in a much larger claim, it’s possible the insurance company could discontinue your policy.
Do you have questions about your insurance? Find an insurance agent near you with our Agent Finder
Search for a local agent with our agent finder map.
Read more about KayLynn's background.
Learn More About This Potentially Valuable Feature of Your Life Insurance Policy
Keeping Critical Papers in Their Place
We Work at Protecting Our Families Because They are Worth It
Decoding The Info in That Little Box
How to Create a Bucket List to Motivate You
The Answers to Some Off-the-Wall Questions
What You’ll Need and What to Do To File a Claim
It Can Be Easy to Forget to Change a Life Insurance Beneficiary
Do You Need a Million Dollar-Plus Life Insurance Policy?
If You are not Careful, Clutter Can Be Overwhelming