Question

Why life insurance doesn’t have deductible while health insurance have?

Answer 1

A deductible is the amount of money which is subtracted from the value of loss not covered by insurance. An insurance company uses deductible for two reasons i) moral hazard ii) ,financial stability.

A life insurance does not have deductible because a deductible does not have any value in case of life insurance, as there is no moral hazard. In case of life insurance, there are no small claims, either death happens or it doesn't. So, there is no use of deductibles.

While in case of health insurance, the insured can get partially injured or fully injured . So there can be small claims. These deductibles are used to eliminate small claims, which helps to keep premium affordable and reduce moral hazard.