Medical expenses in India seem to be a little bit unexpected. The same amount of hospitalization that might have cost ₹40,000 a decade back may now come to ₹1.5 lakhs without even considering any specialist visit, diagnostic test or ICU treatment. When you are yourself responsible for managing the finances of your household, chances are that you have already understood by now that counting on your group medical coverage from your employer or your savings alone does not work out as a strategy but as a risk.
It is here that family health insurance comes into the picture. Instead of purchasing an individual insurance policy for each member of your family, a good family plan provides you with cover for all your family members under one single cover, and that too, in some cases, at less than half the amount of total premium of individual plans. However, not all family medical plans are made equal, and choosing a poor structure or amount of sum insured can actually prove hazardous for you.
This article aims to guide you on how to select your best health insurance plans for family in India.
What Is Family Health Insurance?
A family floater health insurance plan is one policy that covers all members of the family as part of one sum insured. Rather than having different sum insured limits for each member, there is only one limit for the entire family. This is because all members will have access to the one sum insured limit per policy year.
For instance, when you purchase a family floater plan with ₹10 lakhs as the sum insured limit and include yourself, your spouse, and two children in the family, any one of you can use the ₹10 lakhs as long as it falls within the same year. This is not the case with a multi-individual policy because each member in the family will have his or her sum insured as provided in the plan document.
Family floater policies usually cover spouses, children who are dependents, as well as parents or parents-in-law in some cases, although this might not be the best way to go.
Family Floater vs Individual Policies: Which Makes More Sense?
For most customers, this is the first fork in the road, and the best response relies on the makeup and health profile of your family.
Family floater plans work best when:
- Your relatives are quite young and are not likely to make substantial claims at once.
- You wish to reduce your insurance premiums by sharing coverage.
- Your family does not include older people (older people use more healthcare services).
Individual policies make more sense when:
- There are aging parents with existing illnesses because otherwise their claims would use up the family insurance amount, leaving the rest inadequately protected
- Members of the family differ widely in terms of age and medical risks
- You want guaranteed renewability benefits and no-claims discounts to be separate and not shared among all the family members
The typical method followed by many families in India is the middle path, which involves the family floater policy for young and healthy members of the family (self, spouse, children) and separate policies for the parents.
How Much Coverage Does Your Family Actually Need?
That is where many customers make a mistake – they determine the sum insured depending on their budgeting ability rather than their needs.
As a general rule for metro cities, the amount of sum insured recommended by financial planners is usually ₹10-15 lakh for a family of four, keeping in mind the rising costs of treatments in the case of surgeries, cancer treatments or long ICU admissions. For smaller towns where treatments may not be too costly, ₹5-10 lakh would be enough for a young family without any illnesses.
Some things to consider while making your choice:
- The city where you live – treatment expenses are significantly higher in metro cities such as Mumbai, Delhi and Bangalore when compared to Tier-2 and Tier-3 cities
- Number of dependents and their age
- Medical history of your family – a family history of illnesses such as diabetes, heart ailments or cancer should motivate you to choose a higher sum insured
- Whether you have a family floater cover provided by your employer as part of the group plan
What Drives the Premium on Family Health Insurance Plans
Family Health insurance premiums are not random and depend on a number of predictable factors:
- Age of the oldest family member – Even in a floater plan, the premium is computed depending on the age of the oldest member; hence, adding a 55-year-old parent into a young family floater would shoot up the premium disproportionately
- Amount of sum insured opted – the higher the sum insured, the higher the premium, but it is not necessarily directly proportional; a jump from ₹5 lakh to ₹10 lakh often incurs less of a cost than what one would expect
- Number of members covered – the greater the number of people that share the sum insured, the greater the premium, but it is still relatively cheap compared to individual policies
- City zone/tier – Insurance companies divide cities into zones, and residents in metros often incur higher premiums because of higher treatment costs
- Pre-existing conditions – any conditions stated may increase the premium or increase the waiting period
- Riders opted for – critical illness cover, maternity cover, and OPD cover, among others, would increase the premium
For example, for a family floater policy of ₹10 lakh for a young couple with two kids living in a metro city, the premium payable could range from ₹18,000 to ₹30,000 per year, but this can vary substantially based on the insurer and the selected add-ons. Given the high dependence of the premium payable on factors such as the size of the family and city, it makes sense to use a premium calculator.
Key Features to Compare Before You Buy
Don’t just consider the premium while choosing health insurance plans for your family. Consider the following aspects carefully:
- Room rent cap – Room rent is capped as a percentage of the sum insured in certain policies, leading to deductions of a proportional nature from your claim amount if you have selected a higher category room
- Waiting period – Almost all health policies have a waiting period of 2-4 years for pre-existing diseases and a shorter waiting period of 30 days for other conditions except accidents
- Co-payment terms – Whether the policy entails that you pay a percentage of the claim amount, usually applicable in senior citizen policies
- Hospital networks – A large number of cashless hospital networks in proximity to your residence and workplace ease the strain during emergencies
- No Claim Bonus – Many insurance companies give an increment to your sum insured each claim-free year
- Restoration benefit – This restores the sum insured if it gets exhausted in the policy year, especially important for family floater policies where many people use the sum insured
- Maternity cover – Relevant only if you plan to enlarge your family but comes with its own waiting periods
Common Mistakes to Avoid
- Undervaluing insurance to reduce premium cost – saving on premium now could result in poor coverage during a hospitalization
- Not being aware of sub-limits – some affordable policies seem ideal but have sub-limits which severely restrict the claims that you can make for common procedures
- Failure to disclose pre-existing conditions – this is likely to get your claim rejected at the most inconvenient time
- Making a decision based on premium alone – while it may be the lowest in premium, it definitely won’t be the best in claim ratio and hospital network
- Waiting for a long time before getting an insurance policy – premium costs increase with age, and waiting periods are applicable to policies
Final Thoughts
Selecting the ideal family health insurance plan is not about opting for the most economical one. Rather, it should be based on risk analysis of your family, the place you live in, and long-term financial planning for your family. If a family floater seems to be economically efficient for covering your family’s medical expenses, then take a step back and reconsider whether a hybrid combination is a good choice for you.
When selecting the ideal plan for you and your family, calculate your family’s expenses, look around at least three insurance providers for their claim settlement ratio and network of hospitals (premiums are secondary), and finally analyze the policy document for sub-limits and waiting periods. An ideal family health insurance plan would not feel like an additional expense but rather as financial security.
Frequently Asked Questions (FAQs)
How much premium for family health insurance?
The typical annual premium for a family health insurance plan in India for a family of four is between ₹10,000 and ₹35,000 for a coverage amount of ₹10 lakh.
Which is better, Niva Bupa or Care?
There is no general superiority of one insurer over another; Care Health Insurance is usually superior in terms of claim processing and claim denial, whereas Niva Bupa is superior in terms of innovation and maternity insurance.
Which insurance is better for a family?
A comprehensive family floater plan with no room rent restrictions, no co-pay, and unlimited restoration benefits is the ideal family health insurance coverage.
Which plan is best for families?
Depending on your locality and family size, a family floater plan that covers between ₹20 lakh and ₹35 lakh is the best health insurance option for families.
How much will a RS 10 lakh health insurance plan cost for a family of four?
In India, a ₹10 lakh family floater health insurance plan for a family of four (two adults and two children) usually costs between.