How Does A Family Floater Health Insurance Work?

A family floater health insurance plan covers the policyholder’s or the family’s entire sum insured under a single policy, which members can utilise individually or jointly within a given policy year. Though the premium for shared coverage is usually much lower than that of individual plans, the shared coverage limit can be exhausted quickly with multiple claims.

Quick Read

• A family floater is a consolidated health insurance plan that covers your spouse, children, and, depending on the insurer, parents, under a single sum insured

• The premium for a family floater is generally lower than buying separate individual plans

• However, one member’s substantial claim can leave the rest with little or no coverage

• Claims for parents and children may be affected by the insured's age and pre-existing conditions

• A family floater is most suitable for young families without elderly dependents and those without pre-existing health conditions

A family floater health insurance plan is a single policy that covers the insured’s entire family, typically a couple, their parents, and children, under one sum assured. Instead of buying four separate health insurance policies, one for each family member, one buys a single policy with a certain sum insured that each family member can utilise for their treatment. Unlike an individual health insurance plan, a family floater does not provide a separate sum assured for each family member. Knowing how and when a family floater plan can work best for you is critical before buying one.

How Does a Family Floater Plan Actually Work?

A family floater plan works on a simple principle: one sum insured, shared access, individual claims. 

Step 1: Choose a Shared Sum Insured

When buying a family floater plan, you choose a single sum insured for the whole family. For example, you could choose ₹15,00,000 as the sum insured.

Step 2: Claim The Amount Chosen In Step 1

Any family member could claim from the said amount in case of treatment. For example, if your spouse’s treatment costs ₹3,00,000, this amount would be deducted from the ₹15,00,000 selected in Step 1.

Step 3: Restart The Shared Sum Insured

At the time of policy renewal, i.e., the next policy year, the amount chosen in Step 1 becomes available for the whole family again, irrespective of the deductions made in the previous year.

Step 4: Pay Premiums According To Your Age

The family floater’s premium is mostly calculated according to the eldest family member. So, a young couple with two children will have to pay significantly more in premiums if their parents are added as dependents to the same floater.

What are the Pros and Cons of Family Floater Health Insurance?

To give you a quick view of the pros and cons of buying a family floater plan, below is a take that covers all the aspects.

Who Should Consider A Family Floater Plan?

A family floater plan makes sense for nuclear families with young kids, elderly parents, or both. However, a family floater plan can help in the following scenarios:

• Young couples with or without young children: A family floater plan makes sense for young couples, especially if they have small children, because the likelihood of multiple claims occurring simultaneously within the same policy year is low.

•  Nuclear families on a tight budget: A family floater plan is comparatively inexpensive, especially when the budget is limited. Buying a separate plan for each family member will generally be much more expensive.

•  First-time buyers: A new entrant to the world of health insurance may find buying individual plans too confusing.

Who Should Be Cautious With A Family Floater Plan?

A family floater health insurance plan should be avoided or used with caution under the following situations and by the following demographics:

• Families with Elderly Parents: A family floater plan is generally not a great value for senior citizens. If the parents are over 60, adding them to a child’s floater plan is likely to significantly increase the premium. In such a scenario, buying a senior-citizen health insurance plan for the parents offers better value.

• Family Members with Pre-Existing Conditions: One member’s pre-existing condition can negatively affect a family floater plan. The additional premium for treating a pre-existing condition and the waiting period before one can make a claim about it apply to the entire family.

• Likelihood of Simultaneous Claims: If more than one family member is likely to be hospitalised, the shared sum insured may not be sufficient.

What are the  Factors To keep in mind Before Buying?

When considering a family floater health insurance plan, keep the following points in mind.

Sum insured

Calculate your needs based on the family member most likely to require treatment and the expected costs associated with that treatment. Choose a sum insured that adequately covers this amount, rather than buying solely because the premium is affordable.

Sub-limits, exclusions, and co-payments

The sum assured may have limits regarding room rent, and certain treatments may be excluded from coverage. Check the fine print to know exactly what you are covered for.

Waiting period for pre-existing diseases

In the case of a pre-existing disease, the waiting period before a claim can be made should also be reviewed.

No-claim bonus details

The no-claim bonus typically increases the sum insured by a certain percentage if no claim is made in a policy year. The bonus is particularly helpful with a family floater plan, since the increased sum insured now applies to all family members.

Restoration benefit

Some insurance companies offer a restoration benefit that reinstates the sum insured after a certain period. This restoration benefit is a good alternative to a no-claim bonus for a family floater because the increased sum insured for the next policy year would be significantly more valuable than a bonus applicable only to one policy year.

Conclusion

A family floater health insurance policy is a balancing act between value and risk. This type of plan generally allows young and healthy families to buy significantly cheaper coverage. Leading health insurance brands like Niva Bupa offer affordable, effective family floater plans to keep your loved ones safe. The decision to buy a family floater plan should always be based on the buyer’s needs and risk profile. A family floater plan with an adequate sum insured and a restoration benefit should be the preferred option for young and healthy families.