While purchasing a health insurance plan, individuals usually have to choose between family floater and individual health insurance plans. As the name suggests, family health insurance plans provide coverage to all members of a family. Alternatively, an individual health insurance policy is dedicated to just one person, i.e. a policyholder.
To make an informed choice between these two options, you must be well-versed with the dissimilarities between them.
Difference between a family floater and individual health insurance plan
Here’s a quick look at a few differences between individual and:
- Coverage
Family Health Insurance plans provides cover to your family against health problems & illness. Benefits under a family floater plan are typically offered to the primary insured person, his/her spouse and two children. However, a few insurance companies provide family insurance plans for parents, parents-in-law, siblings, and 3-4 children.
On the other hand, an individual health insurance plan only provides coverage benefits to the policyholder.
- Premium
Insurers decide the premium for family health insurance plans on the basis of the oldest family member’s age. Meanwhile, individual plans work for a single person. Thus, the premium amount is decided based on the age of that individual.
Having said that, family floater plans are an affordable option when it comes to the premium amount and extend of coverage it offers. However, if any family member suffers from a pre-existing condition, an individual health cover might be the ideal option.
Nonetheless, as a prospective policy buyer, you must go through terms and conditions of the policy to learn the nits and grits of the factors that works to decide the premium amount.
- Sum insured
The sum insured of a family floater plan insures the entire family, i.e. the family members covered under this plan. Here, the sum insured features no restriction to a single individual, as is the case with individual health insurance policies. For individual plans, the sum insured is applicable only towards policyholders.
Pros and cons of family floater and individuals health insurance plans
Mentioned below are a few pros and cons of individual and family health insurance plans:
Family floater plan
Pros –
- All family members fall under one policy, which assists in easier management as opposed to individual plans for each member.
- Resultantly, they are a cheaper option featuring lower premium amounts.
- If one member in the family gets sick, the entire sum insured amount can be utilised by him/her.
- Family floater plans are subject to tax benefits under Section 80D of the Income Tax Act.
Cons –
- Usually, these plans offer coverage to only the immediate family members of the policyholder.
- If a family makes multiple claims in a year, the subsequent claim amount will be thinned out.
- If one family member uses the entire sum insured amount, the rest of the members become uncovered.
Individual health insurance plan
Pros –
- The insured has total control over the policy.
- If the policyholder does not make any claim, he/she gets no claim bonus.
- Typically, individual insurance policies come with lifelong renewals.
- If one purchases individual insurance policies for each family member, the claim activities of one family member will not affect others’ coverage benefits.
Cons –
- Multiple insurance policies for all family members will entail higher premiums, which might not be cost-effective for certain individuals.
- Managing multiple policies might be challenging.
Which option should one choose?
Evidently, multiple insurance plans for each family member is a better option in terms of coverage. However, this would feature bearing a higher premium, and an increase in the hassle of managing multiple policies. Meanwhile, family floater plans are more cost-efficient, and all family members can avail the benefits under one policy. However, there might be difficulty in enhancing the coverage amount if a family member makes a claim during a particular year.
So, the ideal option varies from person to person. As an individual, if you can afford to pay higher premiums an individual health insurance plan can be ideal. On the other hand, a family health insurance plan could be the ideal choice if you want convenient policy management and budget-friendly coverage benefits.
Furthermore, after deciding between the two opinions, it is crucial for you to select the most preferred insurance provider. The choice between individual and family health insurance plans can be tricky. However, after determining your financial objectives, the decision-making process could become much easier.
