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An amount or period which must be deducted before an insurance payout or settlement is calculated.
Copyright © 2012, Campbell R. Harvey. All Rights Reserved.


1. Able to be taken off of one's tax liability. See: Deduction.

2. In insurance, the amount that a policyholder must pay for a claim before the insurance company will make any payments at all. That is, if an insured event happens, the policyholder is responsible for covering damages up to a certain dollar amount, at which point the insurance company begins coverage. Some insurance policies have an annual deductible; that is, if two insured events happen in a given year, the deductible is only applied once. Other policies have a per event deductible; that is, the deductible applies each time a claim is made. Generally, the higher one's deductible is, the less one pays in premiums on the policy.
Farlex Financial Dictionary. © 2012 Farlex, Inc. All Rights Reserved


A deductible is the dollar amount you must pay for healthcare, damage to your property, or any other insurable claim before your insurance company begins to cover the cost of the bill.

For example, if you have a health insurance policy with an annual $300 deductible, you have to spend $300 of your own money before your insurer will pay whatever portion of the rest of the year's bills it has agreed to cover.

However, in some types of policies, the deductible is per event, not per year. Generally speaking, the higher the deductible you agree to pay, the lower your insurance premiums tend to be. However, the deductible for certain coverage is fixed by the insurance provider. That's the case with Original Medicare.

Dictionary of Financial Terms. Copyright © 2008 Lightbulb Press, Inc. All Rights Reserved.
References in periodicals archive ?
Overall, the IRS's premium deductibility limits may assist some clients, primarily those who itemize their medical expenses and stand to gain more from premium deductions than the standard deduction.
There remain plenty of advocates for MI tax deductibility. Even though the idea was swatted down once, there are a lot of positives worth noting.
Grassley has supported the tax deductibility of long0term care insurance, and Dodd has sponsored the Assisted Living Tax Credit Act, which would establish an assisted living tax credit program similar to the low-income housing tax credit.
Commissioner, the IRS used the concept of the economic family to deny the deductibility of insurance premiums paid by Carnation.
Officials at the group confirmed last week that they plan to consider pressing Congress or the IRS to settle the PMI deductibility question in a way that improves housing affordability.
Creditors offering home-secured lines of credit must provide generic disclosures when an application is made, including a statement warning consumers to consult a tax adviser regarding the deductibility of interest and other charges connected with the line of credit.
While the act only applies to qualified property, its good sense economic and public policy approach should influence the IRS to carefully consider reversing the economic disincentives found in its current restrictive approach to the deductibility of cleanup costs.
In most cases, the special tax deductibility rules should thus not be seen as a deterrent to holding events in this region.
One implication of this finding is that eliminating deductibility for state and local taxes would not necessarily increase federal tax receipts.
But with the restrictive full-funding limit (150 percent of accumulated liability) introduced by the Omnibus Budget Reconciliation Act of 1987; the build-up of plan assets due to good market performance during the 1980s; relatively low levels of inflation, which have muted demands for growth in benefits; and the ever-weakening power of unions, which has undermined their ability to demand benefit increases, deductibility of contributions is now a concern.
The Tax Deductibility of Premiums Paid to Captive Insurers: A Risk Reduction Approach
* Terrorized a member of the House Ways and Means Committee who obliquely suggested a cap on the deductibility of mortgage interest.