Do keep in mind that premium may go up in case one of the members has a pre-existing condition
A health insurance policy is a must-have even before you plan your investments. But before you buy one, give a thought to whether you want to buy an individual or a family floater insurance policy. In case of the latter, a single policy takes care of the medical expenses of the entire family. While both variants of the policy help ease your financial burden at the time of a medical emergency, a family floater policy is not always recommended. So, when does it make sense to take a family floater policy and when not? Here are a few points to keep in mind while deciding.
Make a choice
While the coverage, benefits including restore and no-claim bonus, and features such as waiting period, deductible remain the same between individual plans and family floater plans, the premiums can be different.
The age of the oldest member in a family is an important factor to keep in mind while considering a family floater policy. This is because the premium is calculated based on that. That is, higher the age, higher will be the premium, as the chances of medical complication go up as you age. So if you are aged 30 years, and you include your father and mother in a floater plan, then then premium will be calculated based on your father’s age (being the oldest), say, 50 or 60 years.
If you do have dependent parents or in-laws, who are say over 50, it is better to take separate health policies for them instead of adding them to yours.
However, a young family which includes husband, wife (with or without children), can consider a floater plan.
Do note that children beyond certain age (usually 21 or 25 years, the maximum entry age varies across insurers) are treated as adults and are not covered under floater plans. So it is better to have them moved to a separate individual health policy. However, they will be provided the continuity benefit, that is, there will be no separate waiting period for them when they move to an individual policy.
While the premium may go up in case one of the family members has a pre-existing medical condition, the waiting period, deductibles and other exclusions will be applicable only to that member.
For instance, if the husband has a pre-existing medical condition then only he has to undergo about 2-4 years of waiting period, while the wife will be covered after 30 days.
Before you decide to go for a floater policy, understand how it works. Family floater insurance covers the entire family under a single premium. The sum insured (SI) covers the entire family and can be used in case of multiple hospitalizations in the family during the policy term. Family here includes spouse, maximum two children (up to the age of 21 or 25 years, depending on the maximum age of entry as per the insurer).
Let’s consider an example. Joe and his wife have a family floater health insurance for ₹25 lakh. His wife gets hospitalised and the claim amount comes to ₹25 lakh. Here, the entire cover can be utilised for Joe’s wife. This is the single most important advantage of a floater plan. That is, one SI is available to everyone in the family. Though on the downside, the SI available for the family as a whole reduces. However, most policies in the market offer to restore the SI used.
According to Amit Chhabra, Head, Health Insurance, Policybazaar.com “It is always better to go for floater policy for a family. Even if the sum insured is exhausted, most policies in the market offer restore or refill of sum insured in case of partial or full exhaustion of the cover during the policy term.”
On the other hand, if both had a separate insurance cover for say ₹10 lakh each, then ₹15 lakh would have to come out of Joe’s pocket.
Also, a floater policy that covers all the family members, may result in a lower premium outgo than 2-3 individual policies would. Let’s consider HDFC Ergo’s Health Suraksha plan. For a 30-year old married individual, the premium works out to be ₹15,802 per year. On the other hand, for two individual policies with ₹7.5 lakh cover each, the premium works out to be ₹8,025 per year (totals to ₹16,050 per year).
However, keep in mind that the premium difference between individual and floater plans varies with insurers and taking a floater policy may not always reduce your premium outgo.
In case of Max Bupa’s ReAssure plan – Family floater, for a 30-year old married individual, the premium works out to ₹16,896 per year (including GST) for a ₹20 lakh cover.
Now, if the individuals opt for a separate cover of ₹10 lakh each then the premium works out to be lower at ₹15,510 (including GST).