A family floater health insurance offers a single policy for all family members with a common sum assured for the family. Relatively lower cost of premiums compared to an individual cover, one-stop policy initiation for the family and convenient policy upkeep with one premium payment are advantages over individual policies. On the other hand, individual policies offer individual sum assured for all policyholders, which may be useful for some (dedicated coverage).
Earlier, family floaters faced one consistent criticism of under-coverage. If more than one family member needs to be treated in any one year, the common sum assured might be exhausted in covering for the first family member. However, with the increasing penetration of ₹1 crore sum assured policies, the criticism has been addressed to an extent. So, how do ₹1 crore floaters fare on coverage and premiums ?
Insurance providers offer family floaters with the same features that they have in individual health insurance. The wait for pre-existing disease (PED) coverage is still the standard four years across most, except the ones like Star Health which offer 1-year PED waiting for both. Room rent is capped at single private A/C room for most, but that is owing to ₹1 crore sum assured and not specific family plan. The NCB (no claim bonus) accumulation is also similar, with only Bajaj Allianz providing a higher NCB accumulation in individual health insurance (45 per cent more).
Others, such as maternity cover, OPD cover and organ donor covers are determined by the policy and not influenced by whether it is a family floater or individual cover. Family floaters allow addition of the newborn to the family plan, provided timely intimation is made (within 45 days). An appropriate premium hike is also effected.
How it compares on premiums
Under a family floater plan for a couple and a kid with the eldest member being 35 years old, the sum assured of ₹1 crore can be bought with annual premiums in the ₹15,000-18,000 range at the lower end and at ₹42,000-44,000 at the higher end. The difference is on account of three main factors, besides company factors (service or claims processing). Reinstatement benefit for any illness, related or unrelated to the first claim, is an expensive feature provided with Care Health and Bajaj Allianz. As mentioned, Star Health covers PED from first year and Edelweiss covers it from 2nd year, for the higher pricing. Special features like automatic updating to chronic cover on detection of high BP, cholesterol or diabetes in Aditya Birla’s Activ Health Policy increases its price compared to its standard offering. The basic offering will still feature a reinstatement benefit, room rent capped at single room and fairly decent NCB accumulation (5-10 per cent per year to 50-100 per cent of sum insured).
The pricing would be less than halved (55-60 per cent of family floater) when the same policy, with the same features, is bought for an individual (35 years of age). Thus the insurance provider is covering the family of three lives (in this case) for roughly a cost of two.
Consider another family floater, with older parents and a young adult. This is when premiums start to gather upward momentum. The pricing is almost entirely dependent on the age of the elderly policyholders and age brackets. With parents aged 55-60 years, the same family floater with ₹1 crore of sum assured can hover around ₹70,000 per annum for the family. Room rent capping, restoration of benefits and NCB accumulation are similar to others, for individual policies. Once the parents’ age goes beyond 60 for any one parent the premium can increase by 25 per cent for the same policies. Pricing increases similarly for every 5-year interval from thereon.
Family floater policy is equivalent to putting all the eggs in one basket, and hence would require more reading on policy terms and conditions. While costs are marginally on the lower side with family floaters, the coverage sharing should not be a significant hurdle if higher sum insured is opted for. But then, even if you opt for a lower sum, restoration benefits available in most policies temper the disadvantage to a certain extent. Restoration benefit is when one exhausts the sum assured in a year, but it gets restored for an unrelated illness in most policies while a few also offer related illness restoration benefit as well.