Ways to Decide Between A Family Floater And an Individual Health Insurance Plan in India
Are you about to buy health insurance for the first time? You are quite possibly confused about which one to choose: an individual plan for yourself, or a family plan that covers all family members. Let’s consider the merits of each.
What are individual health insurance plans?
As the name suggests, an individual health insurance policy is a health plan tailored to suit the needs of one person or individual. Suppose you buy the policy in your own name and for your own needs, then the plan is an individual policy for you. Only you can benefit from claiming money against the policy. The sum assured for the plan is paid to you as the policy holder upon diagnosis of illness, to pay for your treatment, diagnostic tests, hospitalisation, and other associated costs. All the benefits accrue to pay just you as the policy holder.
What is a family floater plan?
As the name suggests, this is a health insurance plan that includes all your immediate family members in the policy benefits and pay-out. It is like a group health plan which comprises your spouse, parents, and dependent children and siblings. Contrary to the induvial health plan, the sum assured on the family floater plan is divided amongst all participating members of the plan. The premiums for the family floater plan are generally lower than those of individual family health plans – this is an attractive feature for those who want family coverage without shelling out extra money for high premiums. Most people prefer to include all members of the family in one single plan – the policy is easier to manage and the premiums are lower because the sum assured is distributed amongst the family members.
But is it wise to get family health insurance instead of an individual plan per person?
It might seem that the simplest way to get health insurance for your family is to include them in the family floater plan. But there are some problems to this approach:
- Including everybody in the same family health plan works in principle if there are less dependent family members. The higher the group size, the more the sum assured on the plan is divided amongst each member. For example, if the sum assured of the plan is Rs 25 lakh and there are seven members listed under it, then the amount would be divided by 7 instead of each person getting Rs 25 lakh.
- This becomes a problem when one or more of the family members develop illnesses that require long hospitalisation and treatment. The sum assured in the plan is consumed entirely by one or two persons. This leaves nothing for the rest of the family members who are part of the same policy. If any of the others fall ill or require hospitalisation/surgery during this time, their costs must be paid out of pocket because the plan would not pay for them.
- One way to get around this problem is to buy a top up health insurance policy – this is an enhanced cover offered on both individual and family health plans. It increases the sum assured appreciably. However, the premium payable also rises slightly. But the benefit is that you can claim both the sum assured on the main plan as well as get the coverage from the top up health insurance policy.
- One more solution is to buy individual health insurance plans for each family member. This ensures that each member gets the full sum assured without affecting the benefits of the others in the family. However, it also means that you end up managing multiple health plans instead of just one family floater plan.
- However, this second approach works well for senior citizens and those predisposed to illness. An individual health plan is tailored to meet the medical needs of the insured person. It is far more detailed than a family health plan, and offers more benefits and riders suited to individual needs. So they can get timely treatment at a good private hospital without any worries about where to raise the treatment money from.
Thus, our recommendation is that you take an individual plan for each of your family members if you fear multiple hospital visits in the future. Or you can buy a good family health floater plan with a top up health insurance policy.
