Which is better, a Family Floater Health Insurance Plan or an Individual Health Insurance Plan?

Team Digit, 08 Sep 2018

Making choices in the world of health insurance can be extremely daunting, but we’ve got your back! There are two options when you're looking for best health insurance plan for your family: a family floater health insurance plan or individual health insurance plans.

Now, we can’t make the decision for you, but we can definitely tell you the advantages and disadvantages of both the family floater plan and the individual plan, so that your decision becomes a piece of cake.

In the family floater health insurance plan, your entire family is insured under a single health insurance policy with the same sum insured, whereas in an individual health insurance plan, every individual is insured separately with individual sums insured. This choice depends on several factors, such as the ages of different family members, the coverage or sum insured and the health insurance premium. Let us discuss each to be able to compare the famiy floater health insurance policy and the individual health insurance policy. 

How do ages of different members in the family impact the choice between a family floater plan or an individual health insuranceplan?

Well, if some family members are much older than the others, they have a slightly higher chance of having pre-existing illnesses and therefore they may utilise most of the cover in the year there is an insurance claim made for them, leaving little for the rest of the family to claim against.

So, if you stay in a joint family, it is best to take a floater family policy for your spouse and children, and maybe take individual policies for your parents, who might be more vulnerable to health conditions. 

Which gives a higher sum insured, a family floater plan or an individual plan?

On the flip side, a family floater policy can help you get a higher cover or sum insured by paying much lesser than you would for an individual policy.

Using the same example from before, by paying Rs. 22,000 in a year, you would be insured for Rs. 10 lakhs! Since it is cheaper, can be used by all members covered under the floater policy, it is a better alternative for a young family than an individual policy.

Which has a lower insurance premium, individual or floater policy?

For a millennial small family, a family floater health insurance policy would be cheaper than an individual policy.

Say, if you and your spouse are around the same age and have young kids, and have insured a sum of Rs. 10 lakhs, you would only have to pay around Rs. 22,000 per year as an insurance premium. Whereas for each member of the family on an individual policy, you would be paying as much as Rs. 34,000 every year. :O That’s more than a lakh for the year!

What happens in the case of multiple claims?

However, if your family is having a bad year as far as their health goes (and young people often do), you’re going to be cursing yourself for opting for a floater family health insurance policy.

Say, if you’re insured for Rs. 5 lakhs on your family policy and you fall sick, using up Rs. 2.5 lakhs and your son is also sick with an infectious disease, using Rs. 2 lakhs, that only leaves Rs. 50,000 for your wife and daughter, who might also contract that sickness from your son. Sorry for being so morbid!

In such a case, an individual health insurance policy is a much better investment.

But yes if you choose a plan that has a Restoration Benefit then the Sum Insured is restored every time a claim is made up to the number of times the policy allows, given that the cause of claim is unrelated.

Why are individual health insurance plans more popular than family floater health insurance plans?

Yes, despite the higher premiums, individual health insurance plans are more widely preferred over family floater health insurance plans. Some of the reasons for this are:

1. The sum insured of the family floater health insurance plan is decided basis the senior most member of the family getting insured.

2. If the senior most member crossed the age-limit for renewal of the health insurance policy set by the insurance company, insurance for none of the members in the family floater health insurance plan can be renewed.

3. If a claim is made for any member of the family floater health insurance plan, the NCB (No claim bonus), that is earned after every claim free year, is lost or is made zero for the entire family.

4. If the children, added in the family floater health insurance plan, become majors and shift to an individual health insurance plan, their credit on the waiting period they earned is nullified and they have to again start with a new waiting period.

5. In the Indian family system, there are not just parents and kids who may be dependent on you, you may be responsible for even your aunts and uncles. But there are very few insurance companies to allow to cover these extended members to your family floater health insurance plan.

There you go! Now you do not have to lose any sleep over this toss-up between individual and floater family policies. Digit always has you covered.

Also, you may read on how to choose the best health insurance policy here. 

And how to decide on the right sum insured.

Explain it like I'm five

We're making insurance so simple, now even 5-year-olds can understand it.

You decide to throw a pool party for your 12th birthday. All the arrangements are being made. Along with the pool balls that every pool party has, you also want to buy 2 of those gigantic swan floats that are so popular nowadays. Your mother also suggests you buy some single swimming tubes for those who might not want to get on the float. Your guests can now choose whether they want to sit on the float with other people, or they want to play in the water with one of the solo tubes. The choice between individual and floater family policy is exactly like this. The latter can cover many people like the swan float, but the individual policy is like the tube float, customised for you and only for you.

Team Digit

Digit is a General Insurance company on a mission to Make Insurance Simple for people. We are backed by Fairfax, one of the largest insurance companies in the world.

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