Worried about your grandparents living several hundred miles away? It may take you at least a couple of hours to reach them in case of a medical emergency, but a health insurance policy will come to their rescue immediately. The only problem is that currently in India there aren’t many policies that cover your extended family and buying individual health insurance policies is mostly very expensive.
Max Bupa Health Insurance Co. Ltd aims to address these concerns with its Heartbeat Family First policy that allows you to insure not just your immediate family, but also your extended family under one umbrella. Unlike Max Bupa’s other health insurance plans that are on the higher side of the price spectrum, Family First is actually cost effective if taken for a large family. Read on to find out what the policy offers and when the policy works in your favour.
Also see | When It Works (PDF)
What’s the policy
Family First is a mix of individual and floater covers. An individual cover, like its name suggests, has a single sum insured for a single individual. A floater cover treats the entire family as one unit and the sum insured floats on the entire family. So if one member makes a claim, the sum insured for that year gets reduced for the entire family by the amount of claim made.
How it works: Under Family First, you need to choose separate limits for individual as well as floater covers. Individually, you can choose a sum insured between Rs 1 lakh and Rs 5 lakh. Under the floater option, you can choose between Rs 3 lakh and Rs 15 lakh. For instance, if you choose an individual cover of Rs 1 lakh and a family floater cover of Rs 10 lakh, for a family of 10 members then each member is entitled to an individual sum insured of Rs 1 lakh, whereas the Rs 10 lakh floats on the entire family. So anyone can use up to Rs 10 lakh in a year, apart from the Rs 1 lakh earmarked for him in the individual cover.
However if one member gets hospitalized, the policy will first use the sum insured limit under the individual cover. In case the individual cover is insufficient, the policy will then dip into the floater cover chosen for the entire family.
Says Neeraj Basur, chief financial officer, Max Bupa: “The reason why we have individual covers also is to make the policy affordable. The policyholder will first use the individual cover and then use up the floater cover. The chances of floater being used is lower. Hence the premiums are lower. It also lends some flexibility to the policyholder. Depending upon the individual’s health insurance needs, the policyholder can choose different sums insured for individuals.”
Number of members covered: This policy covers up to 13 relationships and there is no upper limit on the number of people it can cover as long as they are within the defined relationships. Other than covering your immediate family—wife and kids—you can also cover your parents, in-laws, grandparents and grandchildren.
In case the proposer dies during the policy year—it is an annual policy—at the time of renewal, the insurer will need a new proposer. Depending on who the proposer is the relationships will change for other members. The insurer will then reassess the relationship before insuring the member at the time of renewal.
Adds Basur: “There is no limit on the number of people that we underwrite under this policy. However, depending on the sum insured chosen and the age of the member we may insist on medical check-ups.”
Co-payment: For members above the age of 65 years, there is a co-payment of 20% of the claim amount. A co-payment implies that the policyholder shares the cost with the insurer. In this case, the policyholder will have to share 20% of the total costs.
Who gets tax benefit? Since one person buys this health insurance policy on behalf of his family, only that person gets a tax deduction.
Clarifies Basur: “Under the income-tax rules, an individual can claim a tax deduction on health insurance policy taken on behalf of his spouse, children and dependent parents. However, the scope of this policy goes beyond that. We are not clear if an individual can claim a tax deduction on behalf of other members too. However we are working on splitting the costs so that the individual can claim tax deduction as per the rules.”
Under section 80D of the Income-tax Act, health insurance premiums paid for yourself up to Rs 15,000 qualify for a tax deduction. You will get an additional Rs 20,000 deduction if you buy health insurance for your dependent parents, who are senior citizens above the age of 60 years. If you are a senior citizen yourself, you can claim up to Rs 20,000 and Rs 40,000 in total if you are buying health insurance for your dependent parents.
Features: Being a stand-alone health insurance company, Max Bupa offers an in-house team that assists you in settling your claims. Most other insurers employ a third-party administrator, or TPA, an individual who acts as the go-between for you, the hospital and the insurer to settle claims.
The other distinct feature about this policy is that it covers maternity costs after 24 months, provided you have continuously been with the company during this period. The policy also covers the newborn from day one, the only exclusion being vaccination till the child turns 12. However, the cost of maternity benefits is already factored into the premiums. Maternity benefits are not really a risk but a likely eventuality if the policy covers women.
Cost: The way it is structured and considering the number of people it can cover, Family First works out to be cost-effective. It works on the principle of a floater policy that underwrites a group of people together. Since the risk of all members falling ill at the same time is less, the premiums are lower than what it would cost if you were to insure each member of the floater group individually.
So if you are looking to cover a huge family, Family First will work for you. Take the example of a family of 10 people, including grandparents, parents, in-laws, a couple and two kids. Together for an individual cover of Rs 3 lakh for each member and a floater of Rs 10 lakh, the premium comes to around Rs 2.5 lakh. Now break the group into three families and then pick up a combination of floater and individual policies. The sum insured for individual policies is Rs 3 lakh; for the floater policy, it is Rs 5 lakh for the couples and Rs 10 lakh for the family of four. The premium comes to around Rs 4.29 lakh. Even after factoring in the tax advantage that the three families can enjoy individually by insuring the families separately, the combination works out to be an expensive proposition (see table).
Options in the market: This policy is the only ready-made product in this space. However, other insurers can customize a group policy if there are at least 20 members.
Says Sudhir Sarnobat, co-founder and chief executive officer, Medimanage Insurance Broking Pvt. Ltd: “There are no rack policies available, but most insurers will agree to insure a group of at least 20 people. However unlike a group policy that gives benefits of including pre-existing diseases and maternity benefits, such tailor-made policies have them as exclusion till the number exceeds 100.”
Group policies usually cover pre-existing diseases and even give maternity benefits, which normal individual or floater policies don’t. But these benefits are available only if the group size is at least 100 members. In other words, these benefits won’t be available to a group of 20. Even Family First don’t offer these benefits.
Watch out for
While Max Bupa works for a big family, a small family with more number of young members can do better by buying a combination of individual health plans and floater policies.
We took a family of four members with parents above 40 years of age and kids above 18 years of age and Max Bupa Family First was expensive by about Rs 2,000.
Mint Money take
For an extended family, Family First is a good policy. The best part is to buy this policy, the family needn’t be living together.
Says Yashish Dahiya, co-founder and chief executive officer, Policybazaar.com, an insurance portal: “The flexibility and wholeness of these plans make them great. And for an extended family, a floater policy works much cheaper. The only disadvantage is that the tax break goes to one person and these policies are usually in excess of individual tax break limits. So one will have to weigh that in.”
For a small family, buying individual policies and then topping them up with a floater plan will work.
Graphic by Sandeep Bhatnagar/Mint