We all know that wholesale prices are always more attractive than retail. However, wholesale purchase means buying in a bulk and that comes across as a concern. In this world of wholesale purchase, you can even buy Health Insurance policies in bulk. Now, don't seem confused. By Wholesale Purchase of Health Insurance Plans, we mean Family Floater Plans for the full family. Whether or not to avail a Family Floater Plan vis-a-vis Individual Health Insurance Plans, are a very common concern with many.
Family Floater Plans are an extended version of Individual Health Insurance Plans for the rest of the family. Thus, Family Floater Plan is a Complete Health Insurance plan for the entire family whereas Individual Health Insurance is for a single person only.
While an Individual Health Insurance Policy caters to the medical requirement and expenses of the single person insured, a Family Floater Plan caters to the medical requirement of the entire family. In a Family Floater Plan, you could cover yourself, your spouse, children, parents and sometimes even parents-in-law and siblings.
Now, there are loads of pros and cons of Family Floater Plan vis-a-vis Individual Health Insurance. Let us take it one by one.How is a Family Floater Plan better than an Individual Health Insurance Plan?A Family Floater Policy is less expensive as compared to Individual Health Policies. The total cost of purchasing individual policies for all four members in a family is always more than purchasing an umbrella cover for the whole family. It is suitable for a family with lower health risk.
Let us consider it by taking an example of Rahul Bajaj. He lives with his wife Sushma, and 2 children. If he opts for individual policies of Rs 2 lakhs for each member, the total premium would be about Rs 20000. However if Rahul takes a Family Floater Plan for Rs 5 lakhs, which covers himself, his wife and both his children, then the total premium comes upto Rs 8000 approx.In case of only one claim in a year, the family member in a Family Floater Plan gets a greater claim amount compared to what he might have on an individual cover in an Individual health Insurance Plan.
We can again understand the same by the above example of Rahul Bajaj and his family. If Rahul or his wife Sushma falls ill then they can use Rs 3 lakhs for hospitalization coverage vis-a-vis the Rs 2 lakhs cover in an Individual Health Policy. However, the total cumulative benefit of Rs 5 lakhs under the Family Floater Option, is available only once in the entire year for the whole family.Immediate family members can be added in a Family Floater Policy like spouse or children and sometimes even dependent Parents, Parents-in-Laws and also Siblings. However in Individual Health Policies new policies will have to be purchased for each member.How is an Individual Health Insurance Plan better than a Family Floater Plan?Family Floater Policy can be renewed only till the senior most member of the family reaches the maximum age of renewability allowed by the particular insurance company, which is usually 65 to 70 years, after which other family members will need to take a fresh policy. Whereas in Individual Health Insurance Policies, it is not of any concern as each member can take his own policy as long as he is allowed and continues to get all the benefits under the same.
In Family Floater Plan, children who reach 25 years of age will need to buy a separate policy for themselves without the benefit of the earlier continuous coverage that they have got under the Family Floater Policy. The same is not of any concern in Individual Health Insurance Policy as it is a separate contract for the concerned individual irrespective of his age.If there is more than one claim for the family in a particular year, then the umbrella cover may not suffice for the same. Even in case of an accident or any kind of illness, where all the members have to hospitalized or more than one or 2 members need medical attention in the same year then the coverage amount may be insufficient.
Let us consider the same Rahul Bajaj example. If Rahul and Sushma meets an accident and is hospitalized and they both claim Rs 1.8 lakhs, then a total of Rs 3.6 will not be paid in Family Floater Plan of Rs 3 lakhs. Only upto a maximum of Rs 3 lakhs is payable and Rs 60000 will have to be paid out of the pocket. However in Individual Health Plans of Rs 2 lakhs, the total of Rs 3.6 lakhs would have been paid.
From an economical point of view, opting for a Family Floater Plan seems beneficial especially for a younger family. Family Floater Plan is best suited for a younger family with lesser health risk as it is economical for them to buy a package deal instead of individual policies, but Individual Health Insurance Policy is important for an older family with higher health risk so that they are adequately covered with their individual pre-existing diseases, etc. for the long run. There is no requirement to load the entire plan for the whole family for some illness of only one member.
Thus, though both of them have their own benefits and disadvantages. Ideally one should have a separate individual cover for themselves as well as a Family Floater for the entire family in the long run for optimal coverage but it depends on a lot of other factors while designing an ideal health solution for the family. The factors to be kept in mind are of course the financial position of the family, age and health of individual members, group Mediclaim covers, etc. and then the ideal individual solution for a particular family can be attained. However, personally, I am in favour of Family Floater Plans because it is cost effective and it provides umbrella coverage in case one member falls badly ill.
What is your view?
The author is the CEO of MyInsuranceClub.com, an online insurance price & features comparison portal
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You may write to the author at Deepak@myinsuranceclub.com