Buying a family health planA good health insurance policy has become more of a necessity than a luxury today. Given the spiralling cost of medical treatment, every family needs to have a health plan in place. But, should you take individual policies for family members or should you go for a family floater plan that covers the whole family?

Here, you need to make an informed decision. Let’s see the difference between the two and find out why a family floater plan might be the best in most of the cases.

An individual health policy provides cover for medical expenses incurred by an individual or the policyholder only. On the other hand, family floater health policies provide medical coverage for all family members including the policyholder, spouse and dependent children. The sum assured is shared by all the family members under the policy.

Advantages of an individual plan

No sharing – In case you purchase an individual health policy, each family member will have a separate sum assured (the amount the insurance company will pay up to) for themselves. This way, the coverage will be higher. In case of a family floater, the sum assured is shared by family members. So, when a family member uses a part of the sum assured during the year, others will have to do with lower sum assured for that year. This is not great in case multiple family members fall ill in a particular year. For example, suppose a family of four people has purchased a family floater plan of Rs. 4 lakh. If anyone of the family members uses Rs. 2 lakh of the sum assured, the rest of the members will be left with only Rs. 1 lakh cover for the remaining insured period.

NCB Advantage – As you might know, insurers offer No Claim Bonus (NCB) every year if you don’t make a claim during that year. There are firms that provide up to 100% as NCB benefit and the cover is increased the subsequent year while the premium might not be increased.

In case of a family floater, the chances of availing this NCB might be lower. This is because for you to get the NCB benefit, none of the family members should have fallen ill during the year and claims should be zero. The probability of this is usually lower than an individual falling ill. So, the chances of getting NCB benefit is higher in case of individual policies when compared to family floater policies.

Age of children – If you are considering a family floater because you have to get cover for your children, you need to take the age of the children into consideration. Typically, insurers provide cover for children up to the age of 18-25 years. If your child crosses this limit set by the insurer they need to take an individual cover and will not be covered under the floater plan. For instance, if the age set by your insurer is 20 years, the policy will not cover your child’s medical expenses when he or she turns 20. They will have to get a fresh cover. Also, if there are any accrued benefits on the floater plan, the child cannot avail them once he or she reaches that age. So, an individual plan might be better in that case.

Renewing a plan – A family floater policy can be renewed only up to a certain age.

If there are going to be individuals older than 50 years in the family, it’s better to go for an individual plan. The age limit is usually much higher for individual plans. The medical expenses incurred are usually much higher for the elderly, and so their insurance premium will be higher. There are dedicated health plans catering to senior citizens. Choose these instead.

Advantages of a family floater

Lower premium – Usually, a family floater policy comes at a lower rate, compared to individual policies for all family members. The below table will give you an idea. We have considered a family floater plan for a family of four with the oldest member being 35 years. The family floater will cover two adults and two children in this case.

Family Floater Plan Annual Premium (Rs.)
Star Health Family Health Optima 15,416
Universal Sompo Complete HealthCare Insurance 9,706
Cigna TTK ProHealth Protect 10,535

As of November 13

What if you take individual plans for each of the members? Here’s how much you will need to pay.

Individual Health Plan Annual Premium (Rs.)
Star Health Mediclassic 23,976
Cigna TTK Prohealth Protect 21,028
Universal Sompo Complete Health Care 24,920

As of November 13

Thus a family floater will typically entail lower costs than individual plans. However, the premium for a family floater policy is calculated based on the age of the oldest policyholder. So, as the oldest member of the family covered under the policy gets older, the premium will go up. For a family with relatively younger members, the premium for a family floater will be much lower when compared to taking individual health policies for all family members.

Which one to choose?

If you are unmarried and have senior citizen parents to take care of, it is best to go for an individual health policy. However, if your family consists of members in the age group of 20 to 40 years, a family floater plan can help you get a higher cover at a lower cost. Once the senior-most member reaches the age of 50 years, you can start considering individual policies. If you need cover for specific ailments an individual policy might be better.

Understanding your family’s needs will help you decide on the right product. Also, if you just need more cover, consider a top-up for your health plan rather than going in for a new policy.

Staff Writer

This article is written by RupeeIQ editorial staff.