Tennessee Insurance Practice Exam

A higher deductible in a health insurance policy generally correlates with lower premium payments. When an insurance policy has a higher deductible, it means that the policyholder agrees to pay more out of pocket for their medical expenses before the insurer starts contributing towards those costs. As a result of taking on more financial risk, insurance companies often lower the premium payments because they are not expected to pay out as frequently or for lower-cost claims. This relationship encourages consumers to take on more financial responsibility via the higher deductible while offering them a way to reduce their monthly expenses through lower premiums. Thus, a policyholder can save money on their monthly budget by opting for a plan with a higher deductible, even though they should be prepared to pay more costs upfront when they require medical care. This is a common trade-off in health insurance plans that allows for more customization based on individual financial preferences.