Insurance Deductible

The deductible serves the function of "filtering out small claims" for the insurance company. For example, if an auto insurance policy has a 50,000-yen deductible, no benefit is paid for a minor accident with 30,000 yen in repair costs. For a 200,000-yen repair, the benefit paid would be 200,000 minus 50,000 = 150,000 yen. This mechanism allows insurers to reduce administrative costs for small claims and pass the savings on as lower premiums.

The relationship between deductibles and premiums is inversely proportional. Setting the deductible to zero (no deductible) results in the highest premium, while setting it at 100,000 yen significantly lowers the premium. In auto vehicle insurance, simply raising the deductible from 50,000 to 100,000 yen can reduce the annual premium by 10,000 to 20,000 yen. Over the long term, it is often more rational to set a higher deductible to save on premiums and cover small losses out of pocket.

The practical approach to setting the optimal deductible is to use "the amount your emergency fund can handle" as the baseline. If you have 500,000 yen in emergency savings, setting a deductible of 50,000 to 100,000 yen still leaves you with the capacity to cover the out-of-pocket portion if something happens. Conversely, setting a high deductible with minimal savings creates the risk of being unable to pay your share when an incident occurs.

The approach to deductibles also differs by insurance type. For medical insurance, the elimination period (how many days after hospitalization begins before coverage kicks in) is an important decision point given the current trend toward shorter hospital stays. Plans with a zero-day elimination period have higher premiums but pay benefits even for 1-2 day stays. Plans with a 4-day elimination period have lower premiums but pay nothing for stays of 3 days or fewer. Determine your deductible by comprehensively considering your health status, public health insurance coverage, and savings level.