You may be familiar with the popular Spotify premium family plan. In this plan, family members under one roof can enjoy up to 6 Premium accounts. Each person on the plan can have separate accounts and store their own saved music and playlists. Compared to individual premium plans, they are easy to manage.
Do you know that health insurance has something similar, plans that are affordable and easy to manage? These are known as ‘family floaters health insurance plans’. By choosing these, you can avoid the trouble and effort of managing multiple individual policies.
In this article, we will discuss how family floater plans work, their benefits, and their drawbacks.
What Is A Family Floater?
A family floater is a type of health insurance where your family members can be covered under a single policy.
It is a good way to protect your family because it is unlikely that multiple family members will require hospitalisation in the same year and so, such a large cover can be beneficial for anyone in need. If one member of your family needs coverage for expensive medical treatment, the entire sum insured can be used.
Example: Raghav bought a family floater plan for his four-member family (himself, his wife, and his 2 sons) with a sum insured of Rs 25 lakhs. He needs to undergo gallstone removal surgery, which will cost around Rs 5 lakhs. His wife needs angioplasty surgery, which will cost him approximately Rs 8 lakhs. Both these surgeries are required in the same policy year. The cost comes up to Rs 13 lakhs, which is well within the ambit of the coverage and hence, both surgeries will be covered by the policy.
Who Can Be Covered Under A Family Floater Plan?
Generally, you can use a family floater to cover yourself, your spouse, up to 4 dependent children (who must be below 24-25 years of age), and up to 2 parents or parents-in-law.
Note: There are some insurers who permit a combination of 1 parent and 1 parent-in-law.
The total number of members you can cover under one family floater policy will vary across insurance companies.
- In some policies, you can add a maximum of 2 adult members, while in others, you can add 4 or even more than 4 adult members.
- Some insurers allow you to add 2 to 4 dependent children whereas others allow you to add 7, 8, or even more than 8 children.
- Some insurers allow you to add your aunts, uncles, siblings, etc.
- In some policies, there’s also a condition that children can be added to the floater only if one or both parents are a part of the same floater plan.
How Much Coverage Is Sufficient To Protect Your Family?
The sum insured you need to buy depends on your and your family’s requirements. You should buy a total of the individual covers you were buying for yourselves. As simple as that!
For instance, Manav thinks of buying health insurance for himself, his wife, his son, and his daughter. He calculates the sum insured for each of them and comes to a figure of Rs 10 lakhs and chooses a family floater with a sum insured of Rs 40 lakhs. Even if all four members were to require hospitalisation in the same year, each member would be sufficiently covered. No matter what, he shouldn't reduce the amount to Rs 35 lakhs or 30 lakhs - which may result in inadequate coverage in the future.
Who Should Invest In A Family Floater Plan And Who Shouldn’t?
Family floaters make sense if
Buying a family floater policy is not a good idea if
Most family members are young, making hospitalizations less likely to occur in the same year.
There is a wide age gap among the members of your family - If your family has older members, they are likely to get hospitalised more often, thus depleting the sum insured. So, younger individuals will be left with very little or no coverage. Also you may have to pay a high family floater premium if you include yourself, your spouse, children, and parents under the same plan.
None of the family members suffers from any chronic medical conditions.
Anyone in the family has a chronic medical condition. The chances of them requiring hospitalisation are higher, resulting in higher medical expenses.
Only one person, i.e., the policyholder wants to take advantage of the tax benefits. Section 80D of the Income Tax Act provides tax benefits for health insurance plans.
One or more family members need tax benefits available with health insurance under Section 80D of the Income Tax Act.
Advantages Of Family Floater Plans
Family floaters offer the following benefits:
With a family floater cover, you have the opportunity to get a large cover at a lower price. Since the entire family is covered under one cover, you need not invest in multiple plans. Comparatively, your overall premium will also be less.
For instance, if you purchase two individual health insurance plans with a sum insured of Rs 10 Lakhs each for your spouse and yourself - you will end up paying higher premiums as compared to a floater cover of 20 Lakhs covering both of you.
Note: In some cases, the premium amount of a floater policy can be higher than that for separate individual health insurance policies purchased for the same number of people.
2. Easy To Manage
In a family floater, all family members can be covered under a single cover. This means managing one policy and paying one premium. You are less likely to miss a payment and let your policy lapse.
Medical tests and declarations might be required for each member during policy purchase. But, once the purchase process is completed successfully, you will not have to deal with multiple documents or multiple premiums, etc.
Disadvantages Of Family Floater Plans
Family floaters have a few limitations as well:
1. One Family Member May Exhaust The Entire Cover Amount
If a family member is hospitalised, they may use a large portion of coverage. In that case, the other members will be left with insufficient funds. This can be especially problematic if multiple members of your family get hospitalised at the same time.
To prevent this from happening, you can -
- Buy a cover that is sufficient enough to meet every family member's hospitalisation needs.
- Opt for a restoration benefit to restore or refill your sum insured if one family member uses it up in a policy year. It ensures that your family is adequately protected at all times.
Note: The terms and conditions of the restoration benefit may vary across insurers. Hence, make sure you read the details carefully before opting for this benefit.
2. Wrong Medical Declaration May Impact Coverage
In case the insurer finds out that you have disclosed incorrect or incomplete medical details - even for one member (whether intentionally or unintentionally), the entire family's coverage may get affected. This may result in higher premiums or the cancellation of your policy.
Common Questions You Might Have Regarding Family Floaters
1. What happens if the primary policyholder or proposer of the policy unexpectedly passes away during the policy period? Is the floater plan cancelled?
If the proposer or the primary policyholder passes away, any adult member can become the new proposer. The policy does not lapse when the primary policyholder passes away - that is a myth.
2. What happens to the kids as they get older? How and when do you move them to separate policies?
A family floater policy can cover kids up to the age of 24 or 25. When they become adults, they can be movedinto separate individual health policies with credit for all waiting periods served. Be sure not to reduce the floater plan's sum insured during this process. If possible, upgrade the sum insured of the floater - so that you and your spouse will be adequately covered in your old age.
A family floater is an umbrella that covers your entire family. You can go for it - if all your family members are young, don't suffer from any medical conditions, and only one person wants to take advantage of tax benefits. In any case, make sure that you carefully weigh both its pros and cons before making a decision.