Family Floater vs Individual Health Insurance Which One To Opt For?
Depending on the host of factors like income, whether one can pay a higher premium on enhanced cover, ones specific financial goals, type of employment and other factors depicts the plan you want to opt for. Let us take you through essence and meaning of both the plans to help you understand their relevance. Take a look-
What is a Family Floater Scheme?
As the name suggests, “family floater” is a scheme wherein each member of the family who has applied for a family medical insurance has the liberty to utilize the entire sum in times of need like immediate medical expenses.
One of the advantages of insuring a family with a family floater scheme is that it is simple and easy to manage when compared to applying individual policies to family members.
For example, if a family of five are insuring themselves separately for say, 2 lakhs, the total amount that reimbursed will be 10 lakhs. But if a member of the family meets with an unfortunate accident and the medical bills total up to 3 lakhs, the family has to pay an additional 1 lakh rupees as the policy can only provide 2 lakhs. But if the family members have insured themselves using the family floater scheme for the same 10 lakh rupees, then the injured member’s medical bills could be easily paid off without spending additional money.
However, while in an individual plan each individual has a dedicated sum insured, in a floater plan the insurance cover is shared. This means that if one family member makes a claim, the cover reduces on the rest (by the concurrent amount). If due to any unforeseen circumstances, all the members require usage of the health insurance cover, a floater plan will not be able to offer complete financial protection to everyone. Also, the fact that floater health plans are cheaper than individual health plans becomes irrelevant if the age gap between the two spouses is large. It means that the cost advantage of a family floater insurance plan diminishes if the age gap between the spouses, or the eldest member, is huge. This can also be linked with the fact that a floater plan can become a financial liability in case of one spouse keeping constant poor health because this poses the risk the entire insurance corpus being used by one person instead of the cover being extended for everyone in the family.
What is Individual Health Insurance?
This scheme is popular when compared to family floater scheme. This is a scheme wherein a person insures himself/herself for a sum of money by paying a premium every year. This insurance focuses particularly on the health insurance scheme where the insured person can only reimburse the money to pay off his/her medical bills or medical expenses.
It is to be noted that certain personal health insurance policies allow the insured to claim a daily allowance based on the number of days they have been hospitalized. This is a unique characteristic of individual health insurance policies.
- It includes the entire family.
- The need for taking individual policies is nullified.
- It can provide for an expense that is higher than an individual's share.
- The mediclaim for the family includes immediate family members and sometimes even parents and parents-in-law.
- The family floater plan is perfect for a family that has more members belonging to the younger generation. ie, people with low health risks.
- Under section 80 D one can claim tax deductions for this policy under suitable conditions.
Individual Health Insurance
- Working men and women who have insured themselves through a health insurance policy can easily access the option of porting of health insurance with them as they change their jobs.
- It is far more focused on the individual rather than a group of people.
- One can always discuss certain options and perks that come with individual health policies and customize it according to their interests.
- Just like the former policy in individual medical insurance one can claim tax deductions under section 80D.
- Some policies may restrict the maximum age of a family member. Thus, it might reduce the efficiency of the policy.
- If all the members require the insurance money at the same time (say in the same year) it might lead to additional expenses.
Individual Health Insurance
- In most cases, individual health insurance plans are quite expensive when compared to the family floater scheme.
- It can cover only one person.
To Sum It All Up
Family floater scheme is perfect for a family whose members belong to the younger generation and individual health insurance policies are best for people who seek individualistic health assistance.