A family floater is a comprehensive health insurance plan that provides cover for the entire family and not just an individual. Every family member will get benefits under a bigger shared pool. Even for a nuclear family in which there are husband, wife and two children, it is better to get a family floater plan with the sum assured of say Rs.5,00,000 instead of taking separate insurance plan for all family members.
How does a family floater health insurance plan work?
Let’s discuss an example to understand how such plans work. Suppose there is a family, with four members that are husband, wife and two children. The husband pays Rs.6000/- per annum to get an umbrella cover for Rs.3 lakh. There are two possible scenarios:
- Scenario 1: The wife is hospitalized and the total expenses incurred are Rs.2,50,000/-. The insurance company will cover the amount.
- Scenario 2: The whole family got sick because of a stomach bug and had to be hospitalized. The total expenses come out to be Rs.4,50,000/-. As the insurance company will only provide cover for up to Rs.3 lakh, the remaining amount has to be paid by the insured.
It is not common that the whole amount gets exhausted during the policy term as the chances of the entire family getting sick are thin. This is the reason there is always confusion if one should buy family floater or individual policies.
Benefits of family floater plans
- One of the most significant benefits of family floater plan is that you will get umbrella cover for yourself and the entire family. Otherwise, you have to manage multiple policies to make sure everyone is covered. Also, when you buy a family floater plan to include your parents, it is much cheaper in comparison to a senior citizen health plan.
- For maternity cover, family floater plans often have better options in comparison to dedicated health insurance plans that specifically provide maternity cover.
- You will get Income Tax benefits under section 80D of the Income Tax Act.
- You can add more family members under the umbrella cover like the spouse of newborn babies without any much hassle. On the other hand, if you buy a separate health insurance plan, there will be a lot of paperwork and additional waiting period as well.
- In the case of separate policies, the younger ones may not need the health insurance claim for a long time. The premium you pay on such policies will be an extra expense. On the other hand, floater policies are not only cheaper; they cover everyone under one plan.
Points to remember
While buying a Family Floater Health Insurance plan, please make sure to keep the following points in mind:
- The family floater plans can only be renewed till the maximum renewability age of the eldest member. The upper cap on entry age is from 65 to 75, depending on the plan. However, some plans provide lifelong renewability as well.
- Make sure to check the sub-limits for sub-categories before choosing the plan. For example, if a health insurance plan is offering 4 lakh as the sum assured there is a chance they will cover only 10% of the sum assured for medicines.
- Make sure to confirm the policy term. Generally, you have to renew it annually, but now a few plans come with a 2-year term as well.
- There is a lesser-known benefit called reinstatement benefit. Under this benefit, you can get a refill on the sum assured in case you exhaust the sum insured before the end of the policy term.
- Every insurance company has a set of add-ons that you can opt. These add-ons may include 24/7 medical advice, discount on medicines, fitness centre subscriptions and more.
Family floater insurance plans are not only cheaper when compared to individual health insurance plans; they provide better options in many cases as well. For those who have small families with elders or very young members, such plans can offer better and easier cover. It is much easier to add new members in family floater plans, and it is quite cheaper to include your parents in family floater plans rather than buying senior citizen plan for them. By understanding how family floater plans work, you can make a firm choice on which plans to choose for your family. Please note that critical illness is not covered under family floater plans.