Tide Over Medical Expenses With Family Floaters
8/9/2012 9:00 PM Thursday
A family floater can be immensely beneficial and cost effective by bringing the whole family under an umbrella policy for health-related expenses. But is this policy useful for your family’s needs? Jay Sampat helps you understand.
- If a family consisting of three members – husband, wife and a child – has purchased a family policy with a cover of Rs 5 lakh, any of the three members, individually or collectively, can use the policy up to a limit of Rs 5 lakh.
- The advantage of better coverage at lower premiums in case of family floater plans gets negated if one of the family members has an adverse health history.
- Other issues associated with family floaters are the uncertainty regarding the continuity of the policy upon the proposer’s death, and renewal once the seniormost family member reaches the maximum age of eligibility.
The family floater policy has increased the penetration of health cover by bringing the entire family under a single policy cover. Say a family of three – husband, wife and a child – has purchased a family policy with a cover of Rs 5 lakh. Any of the three members, individually or collectively, can use the policy up to a limit of Rs 5 lakh. If one member has used Rs 1 lakh for a hospitalisation bill payment, for example, the remaining Rs 4 lakh cover can be used for the rest of the year. From the next year, the full cover amount would be available to all the members again.
Given the business benefits of family floater policies for insurance companies, it should come as no surprise that they are going all out to promote these. What’s more, since buying a floater policy is cheaper than buying individual cover, such policies have become quite popular with many people. Say a family of four wishes to buy health insurance for the year. Depending on the age of the individual members, a family floater plan for Rs 8 lakh is likely to be cheaper than four individual policies of Rs 2 lakh each, especially in scenarios where just one or two of the four make a claim.
However, the advantage of better coverage at lower premiums gets negated if one of the family members has an adverse health history. For example, if a family member is suffering from a chronic liver or a kidney problem, the probability of regular claims being made is quite high. As a result, the other members of the family would be left with very little insurance cover for the rest of the year. To address the issue of the insurance amount getting extinguished, various companies offer family floaters with unique options, wherein the sum assured is reinstated in individual as well as family floater policies. For instance, Apollo Munich and Star Health restore the cover if the second claim pertains to an ailment unrelated to the first one, or is made by another family member. L&T Insurance’s product promises replenishment of cover in case of accidents and double the sum assured for critical illnesses.
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