It is not just the coronavirus, senior citizens are usually more vulnerable to diseases and hence it is necessary to cover them under an adequate health insurance policy for staying financially protected.
The pandemic has brought into focus a fact that was always known but has been somewhat ignored — health emergencies can come anytime without a warning, and hence it is crucial to have a backup plan in the form of a health insurance policy. (Representative image)
Written by Amit Chhabra
The world that we live in has completely changed over the last year due to a health emergency that has impacted the entire globe. Over 100 million people have been infected by the deadly COVID-19 virus, out of which almost 2.3 million people have died.
The pandemic has brought into focus a fact that was always known but has been somewhat ignored — health emergencies can come anytime without a warning, and hence it is crucial to have a backup plan in the form of a health insurance policy.https://images.indianexpress.com/2020/08/1×1.png
Another fact that this global health emergency has highlighted is the vulnerability of elderly people to health complications. According to the World Health Organisation, aged people are at a higher risk of COVID-19 infection due to their decreased immunity and body reserves, as well as multiple associated co-morbidities.
Given these circumstances, it is only natural for one to worry about the health of parents. One must also remember that it is not just the Coronavirus, senior citizens are usually more vulnerable to diseases and hence it is necessary to cover them under an adequate health insurance policy for staying financially protected.
Family cover vs Individual cover
The next question that one may face is whether to include parents in a family floater health insurance plan or to buy a separate individual health plan for them. A family-floater policy, as the name suggests, is a health insurance plan that covers the entire family instead of a single individual. So by paying a single premium, one can get cover for themselves and their spouse, along with their children and parents. In case any member of the family gets hospitalised, the sum assured can be used for covering the treatment charges. While it may sound tempting to get a single policy that covers your entire family, including your parents, it is crucial to understand this convenience comes at a cost. It is always better to get a separate policy for your parents, and here’s why:
All insurers determine the policy premium based on the risk they need to cover. Higher the risk, greater the amount of premium you need to pay. When you get a health insurance plan for yourself when you are young, say in your 20s, there is little risk for the insurer as you are less prone to diseases. Moreover, there are fewer chances that you would have pre-existing medical conditions at that age. Because of lower risk, the insurer would give you coverage at a lower premium. As opposed to this, when you buy health insurance for your parents, they are more prone to diseases and may also have pre-existing ailments like diabetes and hypertension. So naturally, the premium for your policy would be higher in such a case.
Now when it comes to a family floater plan, the premium is calculated based on the eldest member covered in that plan. So if you include your senior citizen parents in your family-floater health insurance plan, the premium that you pay would rise substantially. Instead, it is better to have a family floater plan for yourself, your spouse and your children, and a separate plan for your parents.
The very idea of a family-floater policy is that a single sum assured at a single premium covers the entire family. This makes these plans cheaper, and also more manageable, compared to buying separate individual plans for each member of the family. This works especially when all members covered under the policy are young and fit, and the risk of hospitalisation of multiple family members during the same year is little to none.
However, when your parents, who are at a higher risk of medical issues, are also covered in the same policy, the sum assured may not be enough to cover an exigency when another member of your family also falls sick. For example, if you have got a sum assured of Rs 10 lakh, it may be enough for your family of two adults in their prime and two children. However, with your parents also included in the same plan, this may not be enough, especially given the fact that there are more chances of that sum being used due to your parents’ age and health vulnerability.
Apart from all these factors, an added bonus of getting a separate policy for your parents is the additional tax benefits that health insurance offers. Under Section 80D of the Income Tax Act, separate deduction can be claimed on premium paid towards health insurance policies of your parents. As per the provision, you can claim a deduction of up to Rs 25,000 for a policy that covers you. However, if you get a separate policy for your senior citizen parents, you can claim an additional deduction of up to Rs 50,000, taking the total available deduction limit under Section 80D to Rs 1,00,000.
There is no doubt that you must get health insurance cover for your parents so that they get the right medical care when they most need it. However, given a choice between buying a separate individual plan for them or including them in your family-floater policy, it always makes more sense to choose the former. It not only saves you some money, it also enables you to choose a policy that best suits your specific needs. So make the right choice!
The author is Head-Health Insurance at Policybazaar.com. Views expressed are that of the author.