Health insurance: get a family package

Health insurance: get a family package

From travel deals to the shopping offers in your nearest retail store, family packages always work out to be cheaper. The same holds true when it comes to health insurance.

Family floater policies cover all members of a family under one umbrella—they charge less premium when compared with the total premium paid for separate individual policies for all members of a family, involve less paperwork and have a single window for any claim process. While we recommend a floater for all families, having just that in the health insurance bouquet is not advisable.

What is a floater policy

You may have come across the term at the time of paying premiums under the group insurance offered by your employer. These are, typically, floater policies that cover not just you but your family too. What started as a corporate concept moved into the retail space a few years back. Now most insurers offer a floater plan.

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A floater policy considers a family as a single unit and insures it as a whole. So, each member doesn’t get a separate policy. Each family member is covered for the sum insured chosen under a single policy.

Says Damien Marmion, chief executive, Max Bupa Health Insurance Co. Ltd: “The premium is based on the age of the oldest member of the family and the number of dependants. Medical tests, however, depend on the medical history each member has."

The sum insured is meant for the entire family and not for each individual. For example, under a floater policy for a family of four—both spouses and two children—with a sum insured of Rs2 lakh, the entire family will be covered for up to Rs2 lakh for one year. The amount is not split across family members. The entire cover could go towards the treatment of one member.

What works

The most perceivable benefit of a floater policy is the cost advantage. For instance, if the oldest member of a four-member family is 35 years old, you will have to pay a premium of around Rs7,752 for a sum insured of Rs3 lakh against Rs14,364 if you bought individual policies for each member.

With the entry of stand-alone health insurers, now there are other benefits to look forward to. For instance, Apollo Munich Health Insurance Co. Ltd covers maternity costs after the fourth year through its floater policy. In its individual policy, maternity costs are covered after the sixth year.

Max Bupa, on the other hand, starts covering maternity costs immediately.

What doesn’t

A floater policy could cost you dear if you are not prudent enough. Sample this: You have a floater policy with a Rs2 lakh cover. If in one policy year, more than one member of your family needs medical treatment, Rs2 lakh may not be sufficient and you may end up paying from your own pocket.

While most insurers offer a cover of up to Rs5 lakh on floater policies, stand-alone health insurers give higher coverage. For instance, Max Bupa offers up to Rs50 lakh as sum insured; Apollo Munich and Star Health and Allied Insurance Co. Ltd offer up to Rs10 lakh each. However, Star Health comes with deductibles, which means that the cover is given only if the claim is above a certain limit. Some general insurers also offer higher cover, including Bajaj Allianz General Insurance Co. Ltd that gives a cover of up to Rs10 lakh and some public sector insurers.

Is it enough?

While buying a floater policy you need to assess whether the cover would be enough for the entire family. Says Antony Jacob, CEO, Apollo Munich Health Insurance: “Before finalizing a deal, one must carefully decide the sum insured, which would depend on the age and the number of members in the family. It is imperative to have adequate cover and every family must choose a sum insured with a proper understanding of the perceived risk. Given high medical inflation, to avoid being caught in a situation where the cover may look inadequate, it is important to plan ahead."

So, how much cover would be enough? “In my opinion, a couple should choose not less than Rs3 lakh. It should be even higher, if kids are to be included in the cover," says Jacob.

When should you buy

When starting a family, treat a floater policy as a top-up to your existing individual health insurance. Says Veer Sardesai, chief executive, Sardesai Finance, a Pune-based financial planner: “Buy a floater only if it makes sense cost-wise. If the age gap between the oldest member and the youngest member of the family is stark, then one may end up paying a higher premium. However, floater policies are best seen as a cheap top-up option to an individual policy for an individual who is starting a family."

Even if your employer gives you a floater, have one at an individual level too. But make sure the cover is adequate.

Graphic by Ahmed Raza Khan / Mint