Pros and Cons of Having a Family Floater Health Insurance Plan

With the rising cost of health expenditures in India today, many families feel the need for financial protection in the form of health insurance. One of the major options offered by insurance companies is a family floater health insurance plan. 

This is a type of health insurance plan where you and your family members are protected under one plan. So, the annual health insurance premium and the total sum insured will also be shared amongst all family members.

But, like with all other health insurance plans, it has its advantages, as well as situations when it can be a little disadvantageous. Here are some of the pros and cons of having a family floater plan:

1. Covers the Whole Family Under One Plan

With a family floater plan, you can cover both yourself, as well as your entire family under one insurance plan. The policy has one sum insured that is shared between all the insured members, and this makes it much easier to manage than having separate policies for the family members.

2. These Plans May Have Lower Premiums

Family floater plans generally have lower premiums than getting individual plans for each family member. Additionally, in this case, the premium is based on the age of the eldest member of the family covered. So, for a larger family, especially one with elderly members, this can be a more economical option, especially as senior citizens’ health plans will tend to be a large additional cost.

3. You Can Easily Add New Family Members

When you have a family floater plan, you can easily add new members to the policy, such as a new spouse, a child, or a parent. While many plans have a limit on how many members you can include, this is still a good option for smaller and younger families.

4. The Entire Sum Insured Can be Used by Any Member

With a family floater plan, any one of the members included in the policy can utilize the entire sum insured amount in case they fall ill and need to get treatment or be hospitalized.

For example, let’s say you have a family of four, and a family floater cover of ₹5 lakhs. Now, if one of these four people has a medical emergency, they can use however much of this amount that is required for their treatment, even the entire amount of ₹5 lakhs.

5. You Will Get Tax Benefits

When you buy a health insurance policy for yourself, spouse, parents or children, you can claim tax benefits under Section 80D of the Income Tax Act. And due to tax returns, you can actually save money on income tax.

1. The Sum Insured is Shared by the Whole Family

As mentioned above, in a family floater plan, the entire family shares the sum insured amount. So, if the plan has a cover of ₹5 lakhs, the whole family will have to share this for the policy period.

Thus, in case something happens to more than one family member at the same time, this single sum insured amount may not be enough.

2. Multiple Claims May Not be Possible

Due to the point above, we can see that it is more difficult to make multiple claims within a year with a family floater plan. Thus, if one person uses a large amount of the sum insured, there will be very little coverage left for the other members, and the second claim gets a thinned-out claim amount.

Indeed, if one member uses the entire sum insured, the others will be left uncovered. This can lead to large out-of-pocket expenses for remaining family members.

Note that some insurers also provide the option for “refill sum insured”, where the insurer will top up your sum insured if you or a family member exhaust it and unfortunately need it again during the year. But, remember that this refill of your sum insured will only be done a set number of times and the terms and conditions apply.

3. Only Covers Immediate Family

Most family floater health insurance plans will only provide coverage for your immediate family – i.e., their spouse, children, and parents or parents-in-law (especially if they are under 60 years) as well. This means that the wider family, such as siblings, grandparents, or grandchildren, will not be covered under this plan.

4. Dependent Children Are Only Covered Up to a Certain Age

With a family floater plan, the policy covers your dependent children, only up to 25 years. This means that after your children reach 25 years of age, they will cease to be covered under their parents’ health insurance, regardless of their own financial situation.

If you wish to continue providing coverage to your children, you will need to get them an individual health insurance policy at this time, in addition to your existing family plan.

5. Affordability and Renewability Change with Senior Citizens

One of the drawbacks of a family floater plan is that the premium is based on the age of the oldest member of the family covered. Thus, including dependent parents who are elderly or over 60 would rack up the premium. Due to the higher chance of them making claims, it can be recommended to opt for a separate senior citizens' health insurance just for them, which will also have additional tax benefits.

Additionally, some family floater policies can only be renewed until the oldest member included in the cover reaches the maximum renewability age, leading to the loss of the entire plan and its accrued benefits. However, in recent times, this is less common as insurers offer lifelong renewability.

Family floater health insurance plans are generally recommended for young married couples, and nuclear families who are only looking to cover themselves, their spouse, and dependent children.

If you feel that a family floater insurance is not for you, you can get individual plans for each member of your family. So, you will each have a separate health insurance plan where both the premium and sum insured is not shared. This is a good option for large families, and for those also wishing to insure their senior parents, as you can get plans tailored to their needs, and everyone will have enough sum insured to cover them.

Conclusion

Family floater health insurance plans have their pros and cons, thus it is important that you know everything about it so that you can make a more informed decision. Keep your family’s needs in mind, and be sure to choose a suitable policy, or policies that provide the best coverage to keep them healthy and safe.