Does it make sense to raise health insurance deductible to save money?

Picture a seesaw where deductibles are at one end and premiums at the other. You must keep a balance that best suits your needs, preferences and budget.

Remember, when deductibles are small, premiums will be high. Conversely, when you increase your deductibles, your premiums will be lower. Whether that will eventually result in savings to you will depend on the level of your claims within that policy year.

Now, about whether it makes sense to raise the health insurance deductible will really depend on just how much risk you are willing to carry in exchange for lower premiums. You should remember that with high deductibles, you will first have to shell out a specified amount before the insurance starts to kick in.

For instance, if you have a $1,000 deductible and your claim is for $1,200, the insurance will only pay for the $200 for this first claim. Then, the succeeding claims will be paid for by the insurance. For minor treatments and small claims, you may end up paying for the medical services and may not avail much of the insurance.

Here are some things you should consider when hoping to strike the balance between premiums and deductibles:

• You and your family's health condition. Are you and your family in good physical shape? Does your family have a history of genetic diseases such as heart disease or diabetes? Try to trace these diseases in your family tree to assess your risk.
• Lifestyle. Do you and your family like to drive fast? Do you smoke? Do you play sports such as skiing, surfing or skateboarding? Is your lifestyle putting you at risk - towards sickness or accidents?
• Savings. Do you have enough stashed up in your savings to pay for the deductible? This emergency fund should double your deductible. This is in case you are involved in an automobile accident and will need to pay deductibles for your health insurance as well as your automobile insurance.

These factors will help you determine how much sense it would make to raise your deductibles.

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