Family Floater Health Insurance in India

Even in this age and time, families and the support system is relevant to us Indians. I was speaking to a friend in the US, and he said that it’s only we Indians who move from being dependant to our parents to being independent and then again being dependant to our children, in one lifecycle.

Like our peculiar culture, Health Insurance in India has a peculiar home-grown plan, the Family Floater health insurance plan.

Family Floater as the name goes is an insurance policy covering an entire family in a single cover amount that “floats” amongst all the family members.

If a family of 4 is covered under a floater of Rs. 5 Lakhs. All or any member can use the Rs. 5 Lakhs annual cover till the cover completely exhausts.

Pros and Cons of Family Floater Health Insurance:

Pro: The primary reasons why floaters are popular and are preferred over individual coverage plans are that they are more cost effective. The family floater concept works under a simple belief that though all members are under risk of hospitalization, not all members would fall ill in a given year. This results in unused individual cover for that member.  At the same time, there could be one large hospitalization for one of the members. For instance, buying a Rs. 3 Lakh individual cover may not have effective long term use in a family of 4, as much as a Rs. 10 Lakh cover spread across all the 4 members.

Another advantage of a family floater is that if there is any kind of limits or cappings on hospital room charges, you enjoy better benefits on a floater cover, than in the individual plans. For instance a Rs 3 Lakh individual cover for a couple gives them a Rs. 3000 room in Oriental Individual Mediclaim for each of them. If they buy a Rs. 5 Lakh floater cover, their room eligibility moves up to Rs. 5000 per day per room. Same is the case with Max Bupa, Religare, Star Health and some other plans.

Con: The major negative of a Floater is the risk of one of the members swiping out the entire cover, leaving the others uncovered. (However, this issue has been addressed through restore/recharge plans discussed below)

How to calculate health insurance coverage for floater plans?

1. Calculate the cover you want individually, taking healthcare inflation into consideration. Read my blog post on Health Insurance planning for retirement
2. Make it a floater by adding additional sum insured for family members as follows:

Young – Less than 40 years: Calculate the minimum individual cover you want, and add an ad hoc 50% additional cover for your wife, plus 25% for each child.

Not Young – Above 40 years: Calculate the minimum individual cover you want, and add 75% for your spouse. Add 25% for each child below 25 years.

Old – Above 60 Years: Calculate the minimum individual cover you want, and add 100% for your spouse. Add 25% for each child below 25 years. Note, family Floaters become very tricky as you grow above 60 years, especially when there are ailments that you are suffering from. Do speak to a unbiased health insurance advisor before you take the call.

Types of Family Floaters:

Extended Family Covers:

Most of the family floater plans cover only Self, Spouse and Kids, but there are some special plans which cover more members. Oriental Happy Family Floater provides for covering Parents and Parents-in-Law, while Max Bupa’s Family First has options to cover 13 relationships, which include parents, in-laws, grandparents, daughter-in-law, grandchildren etc.

Individual/Floater Combination:

Max Bupa’s Family First plan provides a combination cover for all family members. Here each family member has an individual cover, and a separate floater is available for all members covered in the plan. This plan ensures that every member is insulated with an individual cover, at the same time in times of need have the option of dipping into the family pool too.

Restore/Recharge Options:

As mentioned earlier, floaters have a drawback, where one member or one event can completely wipe out the cover for the remaining members. Restore or Recharge feature provides an excellent feature, where if the health insurance cover exhausts during a particular year, and there is another treatment required in the same year which is unrelated to the earlier claims, the plan provides 100% additional coverage. Some plans like Apollo Optima Restore and Star Comprehensive provide this 100% restore only on complete exhaustion of the coverage in the particular year, whereas Religare Care offers an improved restore option, where the recharge of sum insured triggers for even sum insured falling short in a particular claim.

Some points to note, before you sign-up:

1. Some Family Floaters have a maximum renewal age, after which they convert into Individual mediclaim policies. Ensure you are aware of this clause before you sign-up.
2. Family Floater policies require all your family members to be mandatorily covered. In most policies, you cannot buy a policy for your wife, without covering yourself, unless you prove that you are already covered through another health insurance plan.
3. If any of your family members are above the age of 50 or have a higher risk of falling ill, it is advised that you go for a considerably higher cover, or go for a separate top-up or critical illness health insurance for such members.
4. As mentioned earlier, keeping healthcare inflation in mind, review and upgrade your coverage by a minimum Rs. 2 Lakhs every 2 years.

Mahavir Chopra is the Head – Personal Lines & eBusiness at Medimanage.com, a specialist health insurance advisory service for Individuals, Families and Corporates. Know more about Medimanage’s free advisory services here. Read his blogs on health insurance here