Deductible Break-Even Calculator

What is the exact formula this tool uses?

Annual premium saving = low-deductible premium − high-deductible premium. Break-even years = (high deductible − low deductible) ÷ annual premium saving. Months are years × 12. With the default inputs that is (2,000 − 500) ÷ (1,800 − 1,200) = 1,500 ÷ 600 = 2.50 years, or 30.0 months.

What do the 5-year and 10-year figures mean?

They are the annual saving multiplied by 5 or 10, minus the full deductible difference. They show your position if exactly one claim were made and it fell at the end of that period, so a positive number means the premium savings would have outweighed the extra deductible by then. With the defaults they are $1,500 and $4,500.

What does the tool show if the higher deductible saves nothing?

When the annual saving is zero or negative, or the higher deductible is not above the lower one, the break-even rows read “Not applicable” and the recommendation says there is nothing to break even on. The 5-year and 10-year rows still show the arithmetic, which will be negative in that case.

How are the recommendation messages chosen?

They depend only on the break-even period: up to 2 years reads “High deductible is likely better value”, over 2 and up to 4 reads “Consider high deductible if you rarely claim”, and anything longer reads “Low deductible may be better if you claim regularly”. These thresholds are fixed in the code, are not based on your claim history, and are not advice.

Does it know how often I will claim?

No. It has no claim-frequency input, so it assumes nothing about your likelihood of claiming. It compares only the two premium and deductible pairs you type in. If you expect to claim more than once in the break-even period, the extra deductible would be paid each time, which this model does not simulate.

Are taxes, fees or discounts included?

Only the premiums you enter. The tool does not add taxes, instalment charges, or discounts that might change when you switch deductibles. Use the premium amounts shown in each quote, ideally on the same basis for both options, so the saving is not distorted.

Can I use it for health, home, auto or other policies?

The arithmetic is generic for any policy where a higher deductible lowers the annual premium. It does not model coinsurance, copays, out-of-pocket maximums or separate deductibles for different perils, so for those policies it captures only the premium-versus-deductible trade-off.

Are amounts shown in dollars regardless of currency?

Yes. The output rows carry a dollar sign, but the calculation is currency-neutral, so enter all four amounts in the same currency and read the symbol as that currency.