A deductible is an essential aspect of most insurance policies, from health and auto insurance to homeowner's policies. It is the amount of money you must pay out of pocket before your insurance starts to cover costs. For example, if your health insurance has a $1,000 deductible, you'll need to pay that amount for medical services before your insurer begins to cover your medical expenses.

Deductibles can vary depending on the policy and the level of coverage, and in many cases, choosing a higher deductible can reduce your premium. Understanding how deductibles work helps you plan for out-of-pocket expenses and ensures that you're prepared financially in case of an emergency or claim.

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