Pros and Cons of Group Insurance Family Floater Options

What is a Family Floater in Group Insurance?

As we are aware, a group insurance scheme covers a group of people. In most cases, an employer buys group insurance for his employees. Contrary to the general belief, group insurance is not only a health insurance policy but also any personal insurance policy or a life insurance policy.

As this type of policy is purchased by the employer, the employer decides on almost every aspect of it. The employer may decide whether the policy coverage is limited only to the employee or is extended to their families. In cases where the coverage is extended to the employee's family, the plan becomes a family floater group insurance. 

Most employees prefer a group health policy that covers theirs dependents. An employee can add his/her spouse, children, and in some cases, even parents to the same plan. Depending on the plan the employer opts for, the additional premium amount may or may not be charged to the employee. The total sum insured is divided between all the covered family members.

Advantages of Group Insurance Family Floater Option

Group health insurance comes with a host of benefits. However, one of its highlighting features is that a family member can be added to the policy. Let us look at some advantages of having a group insurance family floater option.

1. No waiting period: Group health insurance covers employees and their dependents from day one. There is no concept of a waiting period, which makes it highly attractive. Especially when ageing parents are added to the coverage. 
2. Maternity benefits: Maternity benefits are common add-ons in employee group insurance. Companies offer maternity coverage for female employees (or dependents) without any waiting period.
3. Top-up feature: Since the sum insured is typically less in a group health policy (inadequate in a family floater option), a top-up feature becomes very helpful for employees. An employee can increase the sum insured by paying an additional premium. A top-up benefit can cover the additional claim amount if the claim amount exceeds the total sum insured.

Disadvantages of Group Insurance Family Floater Option

There are a few limitations linked to the group insurance family floater option.

1. Limited sum insured: The addition of dependents to a corporate insurance policy doesn’t increase the limit of the sum insured. Instead, the sum insured is divided amongst the family member, leading to inadequate coverage for all. Also, the sum insured reduces with every usage, making it one of the biggest drawbacks of the policy.
2. Employer’s discretion: The continuity of group health insurance depends on the employer’s discretion. If the employer discontinues the family floater option, the dependents would be exposed to zero covers (if they are solely dependent on group policy).
3. Additional expense: In some cases, dependents can be added by paying an extra premium. Also, exceeding coverage (top-up feature) also comes at a cost.

Conclusion

Organizations know that motivated and productive employees are a driving force behind a successful business. Thus, an employer offering group insurance family floater option can create a feeling of security amongst the employees and boost overall productivity.