Health Insurance: The good, bad & ugly of family floater plans

Written by Sanjiv Bajaj | Updated: Sep 5 2014, 08:35am hrs
Family floater health insurance, as the name suggests, acts as an umbrella of coverage for the entire family and is shared by all its members. It is relatively cheaper than an individual policy and is suited for young families with low health risk. In a family floater plan, one can add immediate members like spouse and children. Another advantage is that if an individual has made only one claim in a year, the family member gets a greater claim amount compared to what he might have got in an individual medical cover.

With many benefits attached to a family floater, there are some downsides as well, the greatest being that if there is more than one claim in a family in a year, the other members are left with little cover. Also, the policy is valid till the proposer turns 60 or 65, depending on the policy. Generally, in a family floater, you can only cover your immediate family members.

An individual health insurance policy caters to the medical requirement and expenses of the single person insured. It is always advisable for older families to opt for one as the health risk is comparatively higher for every member in the family. The best aspect of an individual health insurance policy is that there are no maximum age restrictions for renewability. You can also avail of benefits of loading and discounts until the policy lapses. However, individual health insurance policies are more expensive.

While renewing a family floater policy, you need to remember a single date, instead of three or four, which is the case with individual health insurance plans. In case of the unfortunate demise of the senior-most member of the family, other members can continue with the floater without losing any benefits. The premium is also on a floater basis and not pro-rata. But there is a catch: As soon as the children reach the maximum age (21-25 years, in most cases) they need to

buy a separate policy for themselves without the benefit of the earlier continuous coverage they have not got under the family floater.

From an economical point of view, opting for a floater seems beneficial for a younger family, but, in the long run, it is essential to be covered individually so that pre-existing diseases are covered and you are better secured.

Its advisable to have either an individual or a family floater health cover even if one is covered under a group plan. Those who are covered by employers will not be able to avail the policy when they switch jobs or retire. Another product to consider is the Super Top-Up or high deductible plan, which can help you save considerably. Suppose you have a R3 lakh cover from office. You can buy a R15 lakh top-up plan with a R3 deductible, so that if you ever need to incur expenses of more than R3 lakh, this plan would cover you. In some cases, such policies have the option of converting to individual plans when you leave your

job without any fresh

underwriting.

The writer is managing director, Bajaj Capital