Family floater versus individual insurance policy: Which one to buy?

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A family floater health insurance policy is more economical for a couple and children compared to buying individual policies for all. However, what should unmarried people in their twenties do, especially when their parents are out of medical cover? Since premium on a family floater policy is fixed based on the age of the oldest person, covering older parents may not be viable in all the cases. Money9 Helpline received the following query from a reader:

I am 23-year old based in New Delhi working in the IT sector. My father died in an accident a couple of years ago. My sister is three years younger to me. My mother is 44-year-old. I am willing to buy a health insurance coverage for three of us. I am confused if I should go for a family floater policy covering three of us or should I buy separate policies for each of us. My insurance advisor suggested me to buy a separate policy for myself and covering mother and sister in another – both for Rs 5 lakh coverage with Rs 20 lakh super top-up plan. I am looking for a second opinion. Please advise.

– Abhishek Sharma

Expert view

We approached Rakesh Goyal, Director, Probus Insurance, to get a response.

A health insurance plan is must while planning to invest for life goals. One should understand basic difference between an individual policy and a family floater policy. If your intent is to buy a family floater, the premiums are typically based on eldest member in the policy. But even if we say that you buy a family floater policy, the premiums might be little lower compared to buying a separate policy. Family floater plans are advised as it covers all the family members including parents since premiums for such plans are more cost-effective compared to individual plans.

Even now, people above the age of 50-55 years face difficulties to get a proper insurance coverage as there could be exclusions of many diseases and longer waiting period on pre-existing diseases. One can also customise the policy to cover their dependents, such as parents, spouse and kids.

What you should check

Before you buy a policy, check out the network of hospitals that your insurer has. One should choose the insurer whose network of hospitals includes the major ones in your locality. You can also look at buying a separate policy for your mother and buy family floater for yourself and your sister. Going forward when you get married and settle in your life, you can add your spouse and children in the existing floater policy.

Whether it’s a family floater or individual plan one should look at plans that provide extensive coverage options and covers critical illnesses. I would suggest you increase the basic coverage to Rs 7-10 lakh and take a super-top up plan for another Rs 20-25 lakh. So, one needs to understand both -difference between family floater and individual plan and act accordingly.