Family Floater Plan Vs Individual Health Insurance
A family floater health insurance policy is designed to cover you and your family under a single umbrella contract. You can include yourself and your dependents under the same plan and pay a single premium for combined coverage. An individual insurance plan on the other hand covers a single individual. You cannot include multiple people in the same plan.
And if you’re struggling to decide which one to buy, then here are a few things to consider while choosing between an individual policy and a family floater option
1. Do you want to split the cover?
With a family floater plan, you will have to split your cover with multiple people. This can be particularly challenging if all members of the family share the same household. Here’s an example.
A few months back a Ditto customer reached out to us explaining how they had to make a claim involving an accident. His wife and kid were also involved in the accident as they were all travelling together. All 3 members were hospitalised and the total bill added up to 7 lakhs. Luckily the individual had a policy with a cover totalling 10 lakhs. So he did not have to pay anything out of pocket. But this essentially outlines the shared risk in a household. When you’re all living together, you may have to make multiple claims at the same time. If COVID affects an individual in the family, it’s possible it might infect everyone involved.
However, considering each individual in a family floater plan doesn’t have separate covers, the sum insured may not suffice.
Here’s another example illustrating the same point
- 10 lakh family floater plan: If you make 3 claims during the same year, each totalling 5 lakhs, then the family floater will only cover 2 members. It will pay out 5 lakhs to settle the first claim and 5 lakhs to settle the second claim. However, since you’ve exhausted the full 10 lakhs by now, you’ll have to pay the remaining 5 lakhs out of pocket
- 3 individual plans with a sum insured of 10 lakhs: If you make 3 claims during the same year, each totalling 5 lakhs, then the individual plans will pay out 5 lakh each when the claims do arise. In effect, you won’t have to pay anything out of pocket.
So if you want comprehensive protection for every member in the family, you may have to consider buying individual plans or a family floater plan with a large cover.
2. Do you have a flexible budget?
As you may have guessed already, family floater plans are more affordable when compared to individual plans.
- 10 lakh family floater plan: A family of 3 aged 48, 44 and 19 will pay an annual premium of roughly Rs. 23,000 for a 10 lakh family floater option
- 3 individual plans with a sum insured of 10 lakhs: A healthy family of 3 with similar ages of 48, 44 and 19 will pay a combined total premium of 42,000 for 3 individual plans with a 10 lakh cover
Considering the total difference in premium it
3. Who are you buying it for?
Depending on the specific use case you are trying to cover, you may have to choose one option over the other.
Maternity coverage: If you are looking to buy a plan with maternity benefits then you will likely have to buy a family floater plan. This is a feature common to most insurance companies. They expect both the husband and the wife to be covered in a family floater plan before they extend maternity benefits. So if you are looking for maternity coverage, individual plans won’t cut it.
Aged Parents: Most people want to buy a family floater plan for themselves and include their elderly parents in it. However, this provision is not available in most cases. Most companies have a strict definition of what a family constitutes when it comes to a family floater plan. Generally, this includes the husband, wife and children. The children however need to be younger than 21 or 25 depending on the policy you choose. So if you are looking to buy a policy for your aged parents, you are the child. And if you’re older than 25, then you may not be able to include them in the plan. In this case, you may have to buy a family floater plan for your parents (mother and father) and then an individual plan for yourself.
Pre-existing conditions: If any individual member in the family has certain complicated conditions, then the insurer may suggest that you buy a separate individual plan for them. This is because these people may need policies with very specific features and family floater plans may not extend them. So if somebody in your family has pre-existing conditions, then you may have to consider buying them an individual plan.
4. Can you handle the paperwork?
If you’re buying a family floater plan, then you’ll only have to fill out the application once, submit a single proposal form, pay your premiums all at the same time and receive updates associated with a single plan. This helps ease the operational load and it’s unlikely you’ll forget to pay your premiums on time
If you’re buying several individual insurance policies, you’ll have to fill out the application multiple times, submit multiple proposal forms, pay your premiums multiple times and receive a whole host of updates associated with all the different insurance policies you hold. This could be an operational nightmare and if you’re single-handedly responsible for keeping all the documents in order, it’s possible you may forget to pay your premiums also.
Conclusion
Ultimately there are several factors that you need to consider before deciding between family floater plans and individual policies. You have to look at coverage options, price, use case and the paperwork before you commit to one option over another.