How Does One Choose the Right Family Floater Plan?
If you look at your average cost of living; almost everything is on an upward journey and healthcare is no exception. In India, private healthcare costs have shot through the roof in the last few years and health insurance has become more of a compulsion than a luxury. Even health insurance has many varieties and options and having to choose amongst all of them can leave you confused and unsure.
In fact, considering the number of policies and options on offer, it can be quite daunting to select the policy that best suits your needs. After all, not only do you want sufficient coverage, you also want a policy that suits your budget. That too, something that will be feasible as a regular outflow of cash from a long-term perspective. For a person, there are two kinds of health insurance plans that are commonly bought- The individual health insurance plan and the family floater insurance plan.
What is the family floater insurance plan?
One of the major decisions to make when you decide to buy health insurance is whether to buy individual policies or a family floater plan. A family floater basically is a sum-assured that can be claimed when any member of the family (covered under the floater umbrella) has a health issue. That is; the sum assured “floats” among the different members of the family. It usually covers the insured, their spouse and children. But some plans also include dependent parents, siblings or parent-in-laws. Of course, the treatment costs are only covered up to the limit of the sum insured under the policy. But again, you can increase the coverage if at all it exceeds the limit by buying a top-up or a super-top up to supplement your insurance needs.
What are the advantages of having a family floater plan?
The idea behind buying a family floater plan is that the probability or the likelihood of every member falling ill at the same time is pretty low. Therefore, it makes sense to have a single policy that covers all members of the family. An advantage of the family floater plan is that the premium is much lower than what the premium would be if each individual member of the family had an individual health insurance policy.
Also, maintenance and renewals are much easier with a family floater. For individual policies, you would have to keep a track of when each policy needs to be renewed and ensure that you don’t miss the due dates. The family floater plan is also great in terms of flexibility. Let’s say you have a sum-assured of Rs.10 Lakh! Then this 10 Lakh can be used for treatment expenses of any member of the family. So, having a family floater health insurance plan is a great idea as it takes care of expenses smoothly, offers flexibility, and is easy to keep a track of.
Are there any disadvantages of the family floater plan?
A major disadvantage of the family floater plan is that the premium is determined based on the age of the oldest member of the family. So, if the eldest member crosses 50, the premium can be quite high. That is why it is said that in case of senior citizens it is best not to include them in family floaters as that would skew the premium of the floater. Instead, it is better to have a separate policy for elderly people.
What then should be the ideal age for the oldest member of a family floater? While there are no hard and fast rules, the ideal age of the eldest member of the family should be between 26 and 40. This will ensure that you reap maximum benefits out of your family floater plan. Studies have shown a family floater insurance plan can reduce the premium by up to 55% as compared to individual health insurance policies.
You might still be confused about how to choose a family floater plan that is ideal for you and your family. Well, here are a few pointers you should take care of before you make the choice:
- Your ideal coverage
The main factor determining which family floater plan you choose is the coverage you need. How to decide what is the ideal coverage you need? A general thumb rule to follow is that the sum-assured should be approximately equal to your current annual income. Additional factors to consider are the healthcare costs in the city you live in.
For example, if you live in a metro city like Mumbai or Bengaluru, then having a sum-assured of at least Rs.20 Lakh is a safe bet for a family floater. You should also make note of the sub-limits of the policy. A high sum-assured would not be of much use if the sub-limits prevent its flexible usage. For example, some policies come with limits on the amounts spent on categories like Rs. 50,000 for medicines, Rs. 1 lakh for pre-hospitalization costs, etc.
The age of your family members is also an important factor that influences your coverage amount. If the average age is low; i.e. the eldest member is 40 or below and the children are above 5 years old, the chances of two members requiring medical claims in the same year are rather slim. Hence, you could opt for a lower sum-assured amount.
However, with an aging eldest member or dependent parents, you might feel safe to go for higher amounts. Higher sum-assured policies have higher premiums. So you would have to balance the amount you would like available for your medical emergencies along with the amount of premium you can afford to pay. At the end of the day, you know your family and their general health the best. With right research and prudent decision making, you can make the right choice of family floater plan that is best suited to the needs of your family.
- Exclusions and waiting period
The family floater insurance is a big investment as you are trusting a third party to take care of your entire family’s medical needs when they fall sick. Hence it is a relationship of trust or what you may call a fiduciary relationship. It is, therefore, important that you carefully consider the exclusion clauses in your selected policy. A lot of policies do not cover expenses incurred under alternative medicine like homeopathy, Ayurveda, naturopathy etc. Similarly, lung disease, cirrhosis of the liver, cancer, HIV, and pregnancy are often excluded from family floater plans.
Another factor that should go into your decision making is the waiting period for pre-existing diseases. You should enquire about what diseases are included in the pre-existing disease clause and how long the waiting period is. The lowest waiting period is 2 years and it can go up to 4 years. This is applicable across most health problems except COVID where the waiting period is normally less than a month. Sometimes you can increase your premium amount to waive off or reduce the premium.
A word of caution here! Don’t get ideas of not disclosing your pre-existing diseases to the insurer to save on premium or avoid policy rejection. It is always wise to disclose the illness and pay a higher premium while getting insured for the illness. This means you have a clean track record and later the insurer cannot reject the claim on the grounds of non-disclosure. This allows you a cushion and you do not have to shell out huge amounts of money if your pre-existing illness creates a medical emergency.
- Network hospitals and miscellaneous benefits
Before buying your policy, do check out the hospitals included in your insurer’s network. Choose an insurer that has most of your local hospitals covered in their network. Also, check if there are quality hospitals close to your residence so that you can access them easily in an emergency. Insurance companies have tie-ups with various hospitals and the benefits of getting treated at a network hospital are manifold.
Firstly, network hospitals are familiar with the insurer and their claim filing procedure. Since there is an element of trust between the insurer and the hospital, the process is a lot smoother. You will easily find all the documents required for reimbursement and won’t face any hassles. Secondly, network hospitals also offer cashless transactions. This is a huge benefit as your expenses will be directly settled between the insurer and the hospital. You might have to pay additional costs but this cashless facility saves you the liquidity embarrassment. Other miscellaneous benefits you should look out for are the no-claim bonus or NCB amount, fees for pre-medical screening or number of free health check-ups, health club memberships, coverage for ambulance charges, etc.
