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Business News/ Money / Personal Finance/  Why family floater health plans aren’t for the elderly
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Why family floater health plans aren’t for the elderly

A family floater plan, as the name suggests, covers all family members dependent on the policyholder.

Health insurance needs to be a critical component in your financial plans.Premium
Health insurance needs to be a critical component in your financial plans.

Health insurance needs to be a critical component in your financial plans. That helps you meet any exigency, say financial advisers. It becomes even more important if there are elderly dependents in your family. At the same time, such health plans that cover senior citizens do not come cheap. Premiums have risen sharply, in tandem with the alarming increase in healthcare inflation. Under the circumstances, can a family floater health plan provide a breather?

A family floater plan, as the name suggests, covers all family members dependent on the policyholder. Typically, the policy allows the policyholder, or the proposer, to add their spouse and children. Most policies don’t allow children above 25 years to be part of this plan.

Unlike an individual plan where the sum insured can be claimed by only the policyholder, the sum insured of a family floater is a single pool from which all participants can claim.

Naveen Fernandes, an insurance adviser and chairman of BASL, says that buying a family floater could help save costs since rarely does everyone in a family needs hospitalization at the same time.

But a few insurance advisers are of the opinion that the decision to choose between an individual or a family floater plan might be a tricky one.

Samarth Puja, an insurance adviser with Ditto, said the premium of the family floater is calculated based on the health condition of the eldest member. Hence, the insurance premium might not be as cheap as expected.

Another issue is that most plans don’t allow more than two adults to be added in a family floater. Those who are above 60 years are also excluded from most plans. Thus, senior citizens are not eligible to participate in most family floaters.

Nisha Sanghavi, founder of Promore Fintech, said only a few policies like the ICICI Lombard Health Advantedge Apex Plus Plan and ICICI Lombard Health Elite Plus allow parents above the age of 60 to be added in a family floater but their high premiums might make them unattractive.

In such cases, Sanghavi said that people can opt for multi-individual plans. Such plans are just like individual plans except that they come with a discount if bought together. Here, the premiums are based on individual’s age and health conditions, and the sum insured is different for the members. For instance, in a family floater plan, if the sum insured is 20 lakh, then members can only claim that much amount in a year. And, in a multi individual plan, each member would have a separate sum insured of 20 lakhs. Buying separate plans or multi-individual plans also works out to be cheaper.

According to HDFC ERGO’s Optima Secure Plan’s policy documents, if a family of six buys separate insurance plans, the premium would work out to 1.42 lakh. If they buy a family floater, it would be 96,025. If they buy a multi-individual plan, then it would be 1.28 lakh. The insurer’s calculation is based on the assumption that the six members in the family are of the ages of 5, 25, 35, 45, 55 and 65. So, the sum insured is 10 lakh for each individual in a single or multi-individual plan. In the case of a family floater, the 10 lakh sum insured is for the entire family. Hence, the total sum insured in case of separate policies would be 60 lakh for a six-member family, whereas it would be just 10 lakh for the whole family in a floater plan, though its premium will be lower.

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ABOUT THE AUTHOR
Sashind Ningthoukhongjam
Sashind writes on personal finance, mutual funds, and all things money. He is a regular host of the 'Why Not Mint Money?' podcast.
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Published: 06 Feb 2024, 11:25 PM IST
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