Deductible Meaning: Definition, Examples, and Translations
๐ธ
deductible
[dษชหdสktษb(ษ)l ]
Definition
insurance
An amount of money that you have to pay before an insurance company will pay you any money when you make a claim. The purpose of a deductible is to share the risk between the insurance company and the policyholder.
Synonyms
excess, self-insurance, surplus.
Which Synonym Should You Choose?
| Word | Description / Examples |
|---|---|
| deductible |
A deductible is the amount of money you are responsible for paying out-of-pocket before your insurance company starts to cover expenses. This term is commonly used in health, auto, and home insurance policies.
|
| excess |
Excess, used mainly in British English, is similar to a deductible. It refers to the initial amount you have to pay when making an insurance claim, and the insurance covers the remainder. It's common in travel and car insurance policies.
|
| surplus |
In insurance, surplus refers to the amount of income an insurance company has after it has paid out all claims and expenses. This term is more relevant in the context of insurance company finances rather than individual policyholders.
|
| self-insurance |
Self-insurance means setting aside your own money to cover potential future losses instead of purchasing an insurance policy. This practice is common among large businesses that can handle the financial risk.
|
Examples of usage
- The deductible for my car insurance is $500.
- If you choose a higher deductible, your monthly premium will be lower.
- Her health insurance has a $1000 deductible.
- The deductible must be paid before the insurance company will cover the rest of the cost.
- Many people opt for a lower deductible in exchange for a higher monthly premium.
Translations
To see the translation, please select a language from the options available.
Interesting Facts
Finance
- In personal finance, higher deductibles usually mean lower monthly premiums for insurance.
- Some expenses, like medical payments or property losses, can be considered deductible on taxes, which means they reduce taxable income.
- Deductibles are commonly associated with health insurance plans, auto insurance, and homeowner's insurance.
Insurance
- The purpose of deductibles is to encourage responsible use of insurance by making policyholders share in the costs.
- Many insurance policies offer multiple deductible options, allowing individuals to tailor their coverage based on financial comfort and risk tolerance.
- An aggregate deductible applies to all covered expenses within a policy year, rather than per event.
Education
- Understanding deductibles can empower individuals to make smarter choices about their insurance coverage.
- Many financial literacy programs teach about deductibles as part of broader discussions on managing personal finances and risks.
- Deductibles are also discussed in courses related to economics, risk management, and personal budgeting.
Psychology
- Knowing a deductible can affect a personโs willingness to file a claim; the higher the deductible, the more cautious some may be.
- The concept of deductible is closely tied to risk aversion and how individuals assess their financial safety.
Origin of 'deductible'
Main points about word origin
- The word comes from the Latin 'deductibilis', meaning 'able to be taken away'.
- First recorded use in English was in the mid-18th century.
- It combines 'deduct', which means to take away, and the suffix '-ible', indicating capability.
The term 'deductible' originated from the Latin word 'deductibilis', which means 'able to be removed or subtracted'. The concept of deductibles in insurance policies can be traced back to ancient China, where merchants formed mutual aid societies to protect themselves against financial losses. Over time, the idea of deductibles evolved to become a standard practice in modern insurance contracts, helping to mitigate risk for both insurers and policyholders.