If you’re one of the 280 million Americans who has access to private medical insurance, you might have considered increasing the excess on your policy. If you become ill or suffer an injury, you will be expected to pay an excess as a means of accepting a small portion of risk on behalf of your insurance provider. If you choose to increase your excess, then your premiums will become cheaper. This is a cost effective way of saving money on your insurance, as long as you don’t have to make a claim. Here are some of the pros and cons associated with increasing the excess on your health insurance policy.


There are a wide variety of services and treatments offered by private health insurance providers. Private Health Insurance, or PHI provides cover for all treatment costs of acute conditions and other related health services like accommodation fees, outpatient services and at times, nursing services. However, the spectrum can also cover other aspects of healthcare though this leads to a subsequent increase in the Insurance premium. The PHI has two submarkets and they are the corporate market and the individual market.

The PHI is employer-subscribed in the business market, where the service is provided to the employees as a work-related benefit, whereas the subscription is underwritten in the individual market and occasionally in companies of less than 50 employees. The process by which the Insurance provider decides the amount of risk it is willing to take on assumption is called underwriting.

In the terms of health insurance, an excess refers to the amount you pay to cater for your hospital admission before paying a benefit. To some Insurance providers, an excess means the amount you agree to pay to provide for accommodation in case you are ever admitted to the hospital. The excess, also known as co-payment is payable if either you or another person on your insurance policy goes to the hospital. As mentioned before, the advantage of having an excess in your Health Insurance is that it translates to lower premiums.

You will be better placed to pay high excesses if you are certain not to make many hospital claims; the claims should be about once every two years. For this plan to work, you need to have an extra amount of cash for you to be able to pay the excess whenever the need arises. Something worth noting is that an excess is only paid if you get hospital accommodation in the event that you fall sick.


However, the excess does not apply to surgeries that happen during the day, meaning you do not stay overnight, or you do not get admitted to a hospital. Also, your excess will be waived in the event that you get in an accident, or your kids visit the hospital during your pregnancy term, that is, you are a pregnant mother having other kids; this will continue till they become legal adults. Thus, therefore, paying a higher excess is highly contraindicated if you meet any of the conditions above. You might find yourself saving a little bit of money every month, but if something does go wrong, the increased excess that you’ll be hit with could cause even more misery.

At the end of the day, it comes down to whether or not you are willing to accept the risk that is associated with paying the higher excess. With an average of 35 million of us requiring access to healthcare every day, there’s no way of predicting what’s going to happen in the future. For peace of mind, ensure that you are fully covered by your healthcare plan, regardless of how much you are willing to pay on your excess.