Both family floaters and individual insurance plans serve the basic purpose of safeguarding the finances of policyholders in the event of a medical emergency. However, they have some differences. Read on to learn more.
Decided to buy health insurance for yourself and your loved ones but wondering whether to go for a family floater plan or an individual insurance policy? Which one is beneficial for your needs and budget? Choosing between the two variants can be a tad confusing. While both health insurance products are designed to offer financial protection against unforeseen medical contingencies, they differ on some parameters. Let’s provide a brief understanding of the two plans, along with five major differences to help you make an informed decision.
- Insurance Coverage: A family floater plan is an umbrella that provides coverage for the entire family. The policy usually covers self, spouse and two dependent children though some insurance providers allow the inclusion of siblings, parents, and parents-in-law. In the case of individual cover the policy caters to the needs of one person only; hence all the members of the family have to purchase separate policies.
- Flexibility in Claim: The insurance cover in a family floater is shared among all the members listed in the policy. This means the amount insured can be utilised in any proportion by any or all the participants. As a result, the cover shrinks for the rest as and when a claim is made. An individual plan, on the other hand, has a dedicated sum assured. Since the coverage is restricted to a single person and cannot be shared, he/she will enjoy the benefit for the entire period of the policy.
- Amount of Premium: The premium under the family floater plan hinges on the age of the eldest member to be insured. In an individual plan, since the policy is issued to one person, the premium will naturally be determined by the age of the applicant. A floater plan is generally regarded as a smarter and more affordable option for younger or nuclear families. However, if the family includes a senior citizen suffering from an ailment, an individual cover makes more sense.
- No Claim Bonus (NCB): If an individual policyholder doesn’t make a claim on his health insurance for a year, he gets rewarded by the company with a bonus. The benefit could be an increase in the rate of the sum assured with no extra premium on the renewal of the policy. A family floater plan that covers senior citizens is likely to incur claims since health-related expenses tend to escalate post a particular age. This can block the NCB for the other members of the policy.
- Cost-effectiveness: A family floater plan that comes with a one-time premium for all members is cost-effective compared to the more expensive individual health insurance. However, it is important to note that the advantage of the former disappears if the age gap between the proposer and eldest member is huge. Also, if a member is ailing, the risk of the entire sum insured getting used up by one person cannot be ruled out.
Buy the Right Type of Health Insurance Plan
Buying health insurance is an important financial decision to keep you and your family protected against life’s uncertainties. Hence, it’s crucial to nail the right type of plan. We’ve tried to ease the selection process by comparing the family floaters and individual plans on five parameters to help you pick the one that matches your needs.