If insurance deductibles increase, what typically happens to premiums?

• A. Go Up
• B. Stay the Same
• C. Go Down
• D. Become Unaffordable

Answer: (D)

When you raise the deductible, you’re taking on more of the initial cost yourself. The deductible is the amount you pay out of pocket before the insurer starts to pay. Since you’re assuming more risk for each claim, the insurer can reduce the price of the policy, so the premium tends to go down. It’s a trade-off: you save money on regular payments, but you’ll pay more out-of-pocket if you have a claim.

So the typical effect is a lower premium with a higher deductible. The idea that premiums would become unaffordable isn’t about the premium itself—though a very high deductible can be financially burdensome if you need to claim funds, the premium usually moves in the opposite direction.