If you’ve been searching for a comprehensive health insurance plan, you probably know by now that insurance providers generally extend two broad options. You could pick an individual health policy, or you could choose a family floater option. And while both plans offer comprehensive coverage, there are subtle differences between the two products.

So, in this article, we will parse through these subtleties and see if you should choose a family floater option instead of an individual health policy.

What are Family Floater Health Insurance Policies?

Two of the most commonly sold types of policies are individual health insurance policies and family floater health insurance policies.

Individual health insurance policies are designed to cover only one person per policy. If you have an individual policy, only your medical expenses are covered, and the policy's benefits are only for you. This does not extend to all family members.

On the other hand, family floater health insurance policies provide coverage for multiple family members under a single policy. This type of policy has a common sum insured that can be used by any insured member.

Usually, family floater policies cover you, your spouse, and your dependent children. Some policies also allow for the inclusion of parents and in-laws. However, having separate policies for them may be more beneficial due to their age and potential pre-existing diseases.

Advantages and Disadvantages of a Family Floater Health Insurance Policy

  1. Advantages of Family Floater Health Insurance Policies

Let's take a look at some of the advantages of a family-floater health insurance policy now:

  • More affordable: A family floater policy aggregates the insurance coverage for the entire family into one plan. For example, if you have a family floater policy with a sum insured of ₹10 lakhs, this amount can be used by any or all members covered under the policy. This means if one family member is hospitalised and the expenses amount to ₹3 lakhs, the remaining ₹7 lakhs can still be used by any other family member or the same member within the policy year.
  • Coverage for children: Not all insurers may offer policies for children below 18. So, if you want a good policy for your children, there may not be a lot of options for you. Almost all family floater policies cover the policyholder, spouse, and dependent children.
  • Easy to purchase: Most policies sold as individual policies also offer an option to add your family, making it a family floater.

  2. Disadvantages of Family Floater Health Insurance Policies

While there are several advantages, here are some disadvantages that also need to be considered:

  • Shared Coverage: When we were kids, we all heard the phrase ‘Sharing is caring”, but that is not the case when it comes to health insurance (be it co-payment or family floaters). If your entire family is hospitalised simultaneously, the cover amount of one policy may not be sufficient, even though there are no claim bonuses or restoration benefits. This can be a disadvantage if multiple claims are made yearly.

For example, suppose one family member uses a significant portion of the sum insured. In that case, other members might not have enough coverage if they are to be hospitalised within the same year.

  • Exclusions of family members: Even though you consider your siblings to be immediate family members, you cannot add them to the same family floater policy. And in most cases, you also cannot add your parents and in-laws to the same policy.
  • Lapse: Family floater policies are also easier to manage because you only need to renew one policy. However, if the policy lapses, the entire family loses coverage. It’s essential to ensure timely renewal to maintain continuous coverage.

How are Premiums Calculated in a Family Floater Policy?

While the premium calculation remains the same for the most part, there are a few significant changes to how it is calculated. They are:

  • Age of the oldest member: As people age, the risk of medical conditions and the likelihood of claims also increase. If the oldest member of the policy is significantly older than the other members, it would lead to higher premiums in family floater policies.

For example, if the oldest member is 60 years old, the premium will be higher than for a policy with the oldest member who is 40 years old.

  • Number of people insured: The number of members included in the policy affects the premium. While the sum insured stays the same, more members mean a higher risk for the insurer, resulting in a higher premium.
  • PEDs among family members: If any family member has pre-existing diseases, the insurer may add a loading charge to account for the additional risk. This loading charge applies only to the person with the disease.
  • Family history of illnesses: Unlike an individual policy, insurers also consider the medical history of family members while issuing a family floater policy.

What is the Difference between an Individual Policy and a Family Floater Policy?

While you might think that this is just an individual health insurance policy for your family, there are a few key differences that you must keep in mind:

Basis

Individual Health Insurance

Family Floater Health Insurance

Coverage

This type of policy offers coverage for a single person. The sum insured is dedicated to one individual.

A family floater policy covers multiple family members under one plan. The sum insured is shared among all members.

Affordability

Generally, individual policies can be more expensive when each family member is insured separately. However, the total premium for covering multiple people separately also tends to be higher.

A family floater policy is usually more affordable since the sum insured is shared among family members. This can result in substantial savings, especially for younger and smaller families.

Number of Policies

If you opt for individual policies, each family member will have a separate policy document, sum insured, and renewal date. Managing this can be cumbersome, as you must keep track of multiple policies and their respective renewals.

A family floater policy covers all family members under a single policy with one sum insured and one renewal date. This simplifies and reduces the hassle of keeping track of multiple policies.

Premium Calculation

The premium is calculated based on your age and health condition. Older individuals or those with pre-existing conditions will have higher premiums.

The premium is primarily based on the age of the oldest family member. If you include older parents or in-laws, the premium may be higher than if you insure just younger family members. However, it can still be more affordable than multiple individual policies (not to be confused with multi-individual policies).

How Should You Choose a Suitable Health Insurance policy?

Regardless of a family floater or an individual policy, here are some features you must keep in mind before purchasing one -

What are the Best Family Floater Policies in India in 2024?

With that said, what are the top family floater health insurance policies in 2024?

  1. HDFC ERGO Optima Secure: Optima Secure is HDFC ERGO's flagship policy. It is feature-rich and offers 2X coverage of the base sum insured from day 1. You can pick any room you want. It covers pre- and post-hospitalisation expenses for 60 and 180 days, respectively, has no copayments, and even covers consumables. This policy has a novel NCB feature, where they offer a 50% bonus up to 100%, whether you've made a claim or not.

As an insurer, HDFC ERGO has one of the highest CSRs of 97.5%, significantly higher than the industry average of 91%.

Drawbacks: One of the very few disadvantages of HDFC ERGO is that the premiums are higher than other insurers with similar policies. But this can be because they are the most likely to come through when you need them – which is very important.

This is a very good policy if you can afford the premium. But if you feel that premiums are high, the next policy is another option for you to consider.

  2. Care Supreme: Being one of the top policies of Care, this policy is feature-rich AND affordable at the same time. Like any comprehensive plan, it doesn’t have co-payments, room rent restrictions, or disease-wise sub-limits. However, one of the most unique features of this policy is that it can be purchased by people as old as 99 years old! Care Supreme also covers day-care procedures, AYUSH Treatments, domiciliary treatments, and air ambulance (up to ₹ 5 lakhs).

As an insurer, Care has an average CSR of around 90% (2020-2023), which is aligned with the industry average. These features at such an affordable premium are a steal! But what’s the catch?

Drawbacks: One of Care Supreme's few cons is its slightly higher complaints ratio. This policy also has an extremely long pre-existing disease waiting period of 4 years. However, this can be purchased as an add-on.

  3. Aditya Birla Activ One: Aditya Birla Activ One is a comprehensive health insurance policy focusing on wellness and preventive care. The policy provides coverage for hospitalisation up to  ₹ 6 crore, along with a 2X cover from day 1.

Activ One has seven different variants – all of which have no co-payment, no disease-wise sub-limits, and no room rent restriction. That said, we feel this plan is ideal for individuals who prioritise maintaining a healthy lifestyle and want to earn rewards such as discounts on premiums for their efforts.

Drawbacks: While Aditya Birla's comprehensive health insurance offerings have shown promise, rivalling legacy insurance providers, they are a relatively new entrant in the market.

  4. Niva Bupa ReAssure 2.0: ReAssure 2.0 has three main variants: Bronze+, Platinum+, and Titanium+. The main difference between these three variants is the waiting period imposed on pre-existing diseases. The Bronze+ variant has a PED waiting period of 4 years, whereas the other two variants have a 3-year PED waiting period.

You can purchase this policy between 18 and 65 years of age. If you have no pre-existing diseases or benign PEDs such as high blood pressure, hypothyroidism, or hernia, you may have no problems in availing of the policy. However, those with malignant PEDs may have an increased change of their application getting rejected.

Unlike most policies, the Family Floater Option allows coverage for up to six family members, including parents and in-laws, in addition to the usual coverage for spouse and children. Based on just the features, this is a solid plan. However, there are a few caveats.

Drawbacks: Niva Bupa has a higher complaint volume of 44.52 for every 100 claims. If you’re looking for a plan with great features and are okay with the higher compliant volume, this policy is for you.

Conclusion

Family floater health insurance policies are a good option for providing coverage to multiple family members under a single policy. They offer convenience, affordability, and a decent cover amount that can be used by any family member in the policy. At the same time, it’s also important to consider all of your family members' ages and health conditions and ensure the sum insured is adequate to cover potential hospitalisations in the policy year.

Feel free to use our health insurance tools to compare different policies and features to make an informed decision. And, as always, if you still need more help, contact our IRDAI-Certified Insurance Advisors for unbiased, spam-free insurance advice!