What Is an 80/20 Insurance Policy?

What Is an 80/20 Insurance Policy?
••• Image by Flickr.com, courtesy of Lauren Nelson

You need health insurance to protect your family in case of illness, but you also need an affordable policy. One of the most effective solutions is securing a so-called 80/20 policy with a high deductible and stop-loss provision.


In health insurance policies, 80/20 is a common coinsurance provision that requires the insurance company to pay 80 percent of the medical costs and the insured to pay 20 percent.


The 80/20 provision typically begins after the insured reaches the deductible. Up until this point, the insured is responsible for all medical expenses. Insureds typically have a range of choices for the deductible; for example, they may be able to choose a policy with a $250, $500, or $1,000 deductible.

Stop-Loss Provision

An 80/20 insurance policy may also include a stop-loss provision. After your medical expenses reach the stop-loss amount, the insurance company begins to pay 100 percent of your claim.

Lowering Your Insurance Premium

To lower the cost of your 80/20 health insurance policy, set your deductible and your stop-loss amount as high as you can afford.

80/20 Mortgage Insurance

Mortgage insurance can also have an 80/20 provision. Most lenders require mortgagees to buy private mortgage insurance until they have paid 20 percent or more of their mortgage.