Sole benefits, family deficits

Family floaters are good for young families. Buy separate cover for senior citizens

With the rising cost of healthcare, it is important for everyone to have a health insurance policy. Ideally, a term policy, a medical insurance and an accident policy are enough for an individual. In case of a family, one can look at a family floater policy.

Kanpur-based Ashish Das is confused between a family floater and an individual medical insurance plan to cover his family. The 32-year-old wants to cover his parents (57 and 52 years), wife (29 years) and son (3 years).
 

TAKE YOUR PICK
FAMILY FLOATER PLANS Cheaper, but price based on policy proposer’s age Advised for young families (oldest member below 45) Higher, flexible cover Covers immediate family, not parents Policy renewable till proposer reaches the maximum age	INDIVIDUAL PLANS Expensive as lump sum payouts for different members Advised for families with senior citizens Small, fixed cover Can cover parents, siblings, in-laws Renewable, based on individual’s age

Das is in favour of a family floater plan, as it will be easy on his pocket and will also allow the entire sum assured (if need be) for his mother, who is a heart patient. “But family floater plans do not cover parents,” laments Das.

The highest sum of insurance offered by family floater plans is Rs 10 lakh. However, if you want to increase the cover, top-ups are available with companies such as Star Health and United India for up to Rs 10 lakh.

According to financial planners, the sum insured for those up to 35 years should be at least Rs 2 lakh, Rs 3 lakh for those up to 45 years and Rs 5 lakh for those above 45. As far as the choices are concerned, those above 45-50 years are advised to opt for individual health plans, as health risks are high.

“Das should buy separate plans for his parents for a minimum sum insured of Rs 5 lakh each, and a family floater for himself, his wife and child,” says Rahul Agarwal of Optima Insurance Broker.

For a sum assured of Rs 2 lakh with Bajaj Allianz’s Health Guard family floater, Das would have to shell out Rs 8,978 annually for himself, his spouse and child. Bajaj’s Individual Health Guard would charge another Rs 15,236 for his mother and Rs 17,879 for his father. The total = Rs 42,093.

Younger families (where the senior-most member is below 45 years) should opt for family floaters, as the price is based on the age of the senior-most member of the family. The higher the age of the oldest family member, the higher will be the payout. “But, the utilisation of family plans is higher than individual plans, each of which may not get used,” adds G Srinivasan, chairman and managing director, United India Insurance.

Insurance advisors say if the oldest member is below 45 years, one could look at family floater, as the policy will be priced on the basis of the oldest member’s age. The sum insured could be Rs 8 lakh (yearly premium in the range of Rs 17,890-Rs 21,826 with Bajaj Allianz Health Guard Family Floater).

Typically, two adults (oneself and the spouse) and two children are covered in a floater policy; parents and siblings are not. A few companies like Oriental India Insurance (Happy Family Floater) offer cover for parents. “But these are only up to a certain age. Those above 60 or 65 are not covered,” says Shriraj Deshpande, head-health insurance, Future Generali General Insurance. Products that are available for senior citizens include Oriental’s Happy Family Floater’s Gold Plan, where Das would need to pay a total of Rs 34,280 a year for an insurance cover of Rs 10 lakh.

And there is a tax advantage, as well. According to Section 80D, the premium paid for medical insurance is deductible from your income up to Rs 15,000 a year. However, if you are a senior citizen (56 years and above), the limit increases up to Rs 20,000 a year. Thus, you can deduct up to Rs 35,000 from your taxable income for the medical insurance premiums paid.