What is a deductible?

A deductible is the amount of money that the policyholder must pay out-of-pocket before their insurance coverage kicks in. It is a set annual amount that needs to be met before the insurance company starts paying for covered services. For example, if an individual has a health insurance policy with a $1,000 deductible, they will have to pay for $1,000 worth of medical expenses before their insurance starts paying for any covered services. The deductible can vary depending on the insurance plan and can be different for individual and family coverage. Once the deductible is met, the insurance company will start covering a portion or all of the costs of covered services, depending on the policy terms.