There’s been a tremendous increase in interest in family floater health insurance these days. It covers all family members under a single policy, eliminating the hassle of purchasing separate policies for each member. But the most important question is: is purchasing a family floater policy more beneficial than purchasing individual health policies for different members? Let’s understand which option is best for you for lower premiums and better coverage.
Meaning of a Family Floater Health Policy
Typically, a family floater health policy covers a husband, wife, and their two children. This means that if you take out a cover of ₹10 lakh, the entire amount will act as a single pool for your entire family.
Substantial Savings on Premiums
This policy is significantly cheaper than purchasing individual policies. Insurance companies do this because they understand that the likelihood of multiple family members falling ill at the same time is very low. Therefore, they allow the use of a single fund pool for the entire family. The risk distribution significantly reduces the policy premium.
A Boon for Nuclear Families
Family floater health policies are ideal for nuclear families consisting of a husband and wife and their young children (up to the age of 20 or 30). In such cases, the policy premium is very low. Such a family can purchase a family floater policy with high coverage (e.g., ₹15-20 lakh) at a low premium, which will be much cheaper than the total premium of an individual policy of ₹5 lakh for all four members.
Limitations of a Floater Policy
Family floater policies have low premiums, but the coverage amount is shared among all members, which is their biggest limitation. Suppose a person takes out a floater policy for their family for ₹10 lakh. If one member spends ₹8 lakh on treatment or surgery in a year, the entire family is left with very little cover for the remainder of the year. This problem does not arise with individual policies.
The Increasing Burden of Age
Another important point is that the premium in a family floater policy depends on the oldest member of the family. Therefore, if you include your parents in the policy, the premium will increase significantly, making the policy expensive and unaffordable.
The Right Way to Make a Decision
Family floaters save thousands of rupees on premiums for nuclear families, but divide the coverage. For nuclear families (husband, wife, and minor children), a family floater is an excellent and cost-effective option. If you want to include your parents or want guaranteed coverage for every member, it would be a safer and wiser decision to take an individual policy.