What is a common outcome of having a high deductible in an insurance policy?

What is a common outcome of having a high deductible in an insurance policy?

• A. Lower monthly premiums
• B. Higher likelihood of claims
• C. Greater financial risk
• D. No impact on coverage

Answer: (A)

Having a high deductible in an insurance policy typically results in lower monthly premiums. This is because when the insured agrees to take on more financial responsibility in the form of a higher deductible, the insurer can reduce the cost of the premium. This means that the insured pays less each month or annually for their policy, reflecting the idea that they will cover a larger portion of any potential claims costs before the insurance starts to pay out. Insurers view this arrangement as reducing their risk, as they are less likely to pay out on smaller claims when a higher amount needs to be spent by the policyholder first.

Having a high deductible in an insurance policy typically results in lower monthly premiums. This is because when the insured agrees to take on more financial responsibility in the form of a higher deductible, the insurer can reduce the cost of the premium. This means that the insured pays less each month or annually for their policy, reflecting the idea that they will cover a larger portion of any potential claims costs before the insurance starts to pay out. Insurers view this arrangement as reducing their risk, as they are less likely to pay out on smaller claims when a higher amount needs to be spent by the policyholder first.