How to Make Health Insurance a Perfect Deal for your Entire Family

Insurance is a pretty complex term and you are most likely to confuse between various similar policies when you are to buy one for your own self or your family. Since it is about you or your family members’ health, you cannot be taking much risk and quickly end up buying a family health insurance plan to ensure the safety of the individual member of your family.

Well, things are not as simple and quickly resolvable as they may seem to you. You need to be very careful when exploring an insurer’s website, reading through various insurance policies’ terms. There might be several questions in your mind, such as whether you should buy an individual health plan or a single family floater plan to cover all your family members.

It is evident that there are numerous health insurance companies nationwide. Each of those companies has multiple variants of individual and family health plans, where each plan has its own pros and cons. Let us get things sorted out for you and help you choose the best health insurance plan for you and your family.

Before we proceed further, let us know a bit more about the difference between an individual and a family health plan precisely.

Understanding the Basics

In case of an individual health insurance plan, the policy is issued in the name of the individual policyholder. Therefore, if you need all your family members to get the coverage, then you have to get different health insurance policies issued in the name of your individual family member. Simply put, the number of policies issued must be equal to the number of persons in your family. This ensures that every individual will have a dedicated sum assured under their respective health insurance policies.

On the other hand, the case of a family health plan is entirely different. To be precise, the insurance policy is issued to the entire family as a whole and the sum assured is be a single one for all, which however is unlike in the case of an individual health plan. This policy introduces the term Floater, i.e. the sum assured to be shared by all the members of your family.

For instance, if yours is a small family of 3, i.e. you, your spouse, and a kid, and have a floater plan with the sum assured of Rs. 4 Lakh, then all three members of the family are to share the coverage of Rs. 4 Lakh. In other words, your insurer has a total liability of Rs. 4 Lakh towards your family for the entire policy term of 1 year. Also, if anyone gets hospitalized due to a medical emergency, your insurer will take care of the expenses while there will be a direct impact on the sum assured. This also means that the sum assured will decrease for the other two family members as well.

An Analysis - Compare Individual and Family Health Plans

An individual health plan for each family member certainly costs more as compared to a family health plan. Despite the cost, there are certain drawbacks of family health plans due to which individual health plans are recommended over floater plans. Below is a list:

1. Individual health plans are offered to individuals, where age is one key point in the criteria for issuing a policy. Simply put, the policy is issued to an individual while keeping his/her age in view and the premium will be determined based on his/her age. In contrast, in case of a family floater plan, the age of the senior most family member is recorded and the policy is issued accordingly. Also, the policy terminates automatically when that person reaches the max age cap as per the policy terms and the coverage ends for other family members as well.
2. If a family health plan also covers children (who are minors) and is supposed to migrate to individual health plans for each on becoming major, the credits earned for waiting periods are nullified.
3. Since the sum assured is a single one in case of a family floater plan, a claim by one family member leads to NCB (No Claim Bonus) nullified for the entire policy year. This NCB is usually provided to a policyholder in terms of reduction in the premium payable on renewal or increased sum assured for the next year. Some recent innovations in the health insurance sector have made it compulsory for the insurers to provide their customers with the benefit of NCB for each claim-free year, which can be up to 50% of the sum assured or even more.
4. There are only a few insurance companies nationwide that allow the inclusion of grandparents or in-laws in a family floater plan while many others allow the inclusion of only kids and dependent parents (if any). In this case, you anyway have purchase individual policies for such individuals in your extended family.

IRDA Health Regulations 2013

The IRDA (Insurance Regulatory and Development Authority) of India, in its health regulation for 2013, had provided coverage for the gaps as we discussed above in point I and II. The regulatory has granted its permission allowing lifelong renewal of policies, where the premium is subject to the incidence rate and not the age of the senior most family member. Also, the credits earned over the waiting periods are to be carry forwarded if an insurer migrates one or more members of a family having a family floater plan to individual plans.

Well, the above changes by the regulators have done a good job letting individuals easily choose between a family health plan and an individual health plan, as one now has to consider the features of a plan while making their choice.

Give a Second Thought

Well, despite various pros and cons, family floater plans do have their own specific benefits too. The first benefit that you cannot ignore is that these plans spare you of the hassle of buying and then managing multiple health insurance policies, keeping in mind the renewal date of the individual policy, and so on. The second and the key benefit is that family floater plans are more affordable and are total value for money. These plans are the perfect choice for small families who are specific and tight on their budget, particularly on insurance spending. Furthermore, a floater plan is the perfect option to avail coverage for minors too, as individual health policies are not available for them.

Create the Right strategy

After a thorough analysis above, it is evident that a family floater plan can prove to be a wise choice if made with adequate care, followed by a comprehensive, comparative analysis. Here is what you should be doing further:

1. Start by exploring, and then shortlist the policies based on their features.
2. Consider including you and your kids in a single floater plan. In case you were recently diagnosed with a serious illness, you’re at a high risk, so consider buying an individual health plan for yourself while including your kids and rest of the family in a single floater policy. Also, make sure you choose a high sum assured since you’re opting for including multiple family members in a single policy.
3. Do purchase individual health policies for your parents. The low-cost health insurance will provide health coverage to them while the dedicated sum assured will provide them coverage, as they most likely are prone to illnesses leading to hospitalization. This will help you prevent the NCB from being nullified even if your parents get hospitalized due to a medical emergency.

Note: Even though you have to pay an additional premium since you’re buying multiple policies, the coverage will also be double and you can keep the NCB from being nullified even in case of a medical emergency.

The Bottom Line!

The premium is the prime factor that influences an individual’s decision to buy a health insurance policy whether an individual or a family floater plan. However, you shouldn’t let your decision to buy a health insurance policy influence, as you have to carefully explore the features of various policies and make a wise decision. If you have found the above statement, i.e. individuals with health issues should buy individual health plans while kids and other family members to buy a family floater plan a good deal, then you should go with it. Buy your senior citizen parents individual health plans and make your decision the best deal ever.