Family floater or individual insurance: Things to consider while choosing a health cover

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Sujoy is a 40-year-old father of two who runs a computing business. He also supports his parents who live with him. He is considering buying a health insurance policy to cover the medical expenses of his family. Fortunately for Sujoy, except for his parents who struggle with heart ailments, his family has enjoyed good health.

He believes that at this stage only his parents need health insurance. He recently heard about family floater health plans that can cover his entire family at a low premium. Considering the recent concerns on health, he wants to buy a plan as soon as possible. Has Sujoy taken the right decision?

Sujoy had to take two decisions. The first was whether his entire family needed insurance or only his elderly parents and the second was the type of health policy to buy. Apart from health insurance for his parents, Sujoy should also cover himself and his family. While they may be enjoying good health now, sudden illness or accident can result in large medical bills that will put a strain on their finances. The current health crisis underscores the need more than ever. Moreover, it is better to start early not only for the cost advantages but also because a record of uninterrupted health cover makes it easier to get insurance when you need it later in life.

The next decision that Sujoy had to take was about the type of policy to opt for. Sujoy has the option of taking a floater policy that will cover his entire family or take individual health policies. While the floater policy will give him the advantage of covering his whole family at a low premium and a larger sum assured, it comes with certain drawbacks. The most important drawback is that the premium will typically depend upon the age of the oldest member of the family being covered, in this case Sujoy’s father. Given his age and medical complications, the premium will be higher. Taking a floater family policy has the additional issue of the policy terminating on the demise of the primary insured person. The others will then be without cover and have to take a new policy.

Sujoy should consider covering his parents separately with individual health policies so that they are adequately covered for their particular requirements. For himself, his wife and children a low cost family floater policy will work just as well since they are young and healthy. The decision on taking a family policy or individual policies should not be based on the cost alone but also the flexibility to tailor the health cover to suit their specific needs.

(Content on this page is courtesy Centre for Investment Education and Learning (CIEL). Contributions by Girija Gadre, Arti Bhargava and Labdhi Mehta.)


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