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| Individual versus family floater policy |
| Harsh Roongta / Mumbai Aug 23, 2009, 00:53 IST |
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There is more awareness now on healthcare costs and hence also about mediclaim insurance that helps mitigate the risk of such costs. One question that the first-time buyer face is whether to take individual policies for each family member or a family floater?
An individual policy means a separate insurance for each person with defined cover. In contrast, in a family floater, the limit can be utilised by any of member. If you buy a family floater of Rs 4 lakh, then any member can utilise this entire limit.
Suppose a family of three wants to take a mediclaim, depending on the ages of individual members, the family floater plan for Rs 4 lakh is likely to be cheaper than the three individual policies of Rs 2 lakh each. So, in many ways the family floater plan offers flexibility in terms of utilising the overall insurance coverage among the group. This would seem to indicate a floater plan is always more beneficial for a family. However, it may not be so. We have used some examples to understand this better (See table).
The table contains policy for two typical families from ICICI Lombard General Insurance.
As you can see, for the older family there is hardly any cost advantage of taking a family floater. By just paying Rs 1,547 extra, they get the benefit of having the same amount of cover individually and quadrupling the overall family cover. Of course, the younger family has a distinct cost advantage if they decide to go in for a family floater policy, but at the risk of reducing the overall family cover. Since you can only grow older, the visible cost-advantage of a family floater will soon be reduced to almost nothing but your overall family cover will be reduced when you need it the most.
There are other disadvantages to a family floater policy as well. The policy will be renewed only till the seniormost member reaches the maximum age of renewability (in most cases, 65 to 70 years). As it stands today, at that stage, the other family members will need to take a fresh policy without having the benefit of their claim history and pre-existing disease coverage. The same thing applies to children who reach the maximum age (normally 25 years in most cases), after which they will need to buy a separate policy. Most policies also make no specific provision for continuing cover of the surviving members in case of the unfortunate death of the seniormost member. Also, in a family floater policy, the claim from one member will reduce the bonus coverage/premium discount for the entire family.
All in all, since continuous coverage and claim history is critical in this category, and currently there does not seem to be any stated basis for taking these with you when you are forced out of a family floater plan, it is recommended that you go for individual policies.
The author is CEO,
www.apna paisa.com
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