Buying Health Insurance is one of the most responsible things you can do for your family. It can be seen as a promise that acts as a financial cushion that allows them to focus on the recovery and not worry about the finances. However, in doing so, you will have to make a basic decision: is it better to purchase separate health insurance policies per member of the family or get a family health insurance policy that will cover all of them? It is a dilemma, and no one answer is actually right. This will all depend on the individual family structure, age, and health requirements.
In this guide, we will break down the differences between these two types of medical insurance plans, explore their pros and cons, and help you decide which health shield is the perfect fit for your family.
What is an Individual Health Insurance Plan?
An individual Health Insurance plan is exactly what it sounds like: a policy that covers just one person. Under this plan, each family member, including you, your spouse, your children, and your parents, would have their own separate policy with its own dedicated sum insured.
How Does It Work?
Imagine the sum insured as a personal health savings account that only you can use. If you have an individual policy with a ₹5000 sum insured, that entire amount is exclusively for your medical expenses for the policy year. What happens with your spouse’s or child’s policy has no impact on yours.
Key Advantages of an Individual Policy
- Dedicated Coverage: There is the greatest advantage of the form that sum insured is not shared. This implies that just because one of the family members has a serious health condition and has to spend a lot of time in the hospital, the health coverage does not run out on any other family member. Every individual possesses their security cushion.
- Customisable: These plans are very flexible. You have the option of taking out a larger sum insured on a person in the family who has an underlying condition or who presents a higher risk, yet maintains a simpler cover on the younger and healthier members.
- No-Claim Bonus (NCB): If one family member makes a claim, it only affects the NCB on their specific policy. The other family members who do not make any claim receive their reward of NCB that year.
What is a Family Health Insurance Plan?
A family health insurance plan, often called a “family floater,” is a single policy that provides health coverage for your entire family under one shared sum insured. It typically covers the primary individual, their spouse, and up to four dependent children.
How Does It Work?
Think of the sum insured as a shared family pool of money for medical expenses. If you buy a family floater plan with a ₹10,000 sum insured, any member of the family covered under that plan can use that amount for their hospitalisation needs during the policy year.
For example, if the husband is hospitalised and the bill is ₹3000, that amount is deducted from the shared pool, leaving ₹7000 available for any other family member for the rest of the year.
Key Advantages of a Family Floater Policy
- Cost-Effective: This is the most persuasive reason why people prefer family floaters. A single medical insurance policy that covers a complete family is significantly lower in cost than the total price of getting medical insurance cover per person.
- Convenient: Managing one policy is more convenient than juggling multiple policies. You have one premium payment date, one policy document, and one health insurance company to deal with for everyone.
- Flexible to Add New Members: It is usually very easy to add a new family member, such as a newborn baby or a newly married spouse, to an existing floater plan at the time of renewal.
How to Decide Which is Better for You?
Now for the crucial part: making the choice. To do this, you need to look closely at your family’s profile. Let’s break it down into simple factors.
Consider Your Family’s Age and Health Status
This is the most important factor. Here is what you should look for:
- Ideal for a Family Floater: A young couple, with or without young children, is the perfect candidate for a family floater plan. The probability of multiple family members needing major hospitalisation in the same year is very low. The cost savings of a floater plan make it an incredibly smart choice.
- When to Be Cautious: If your family includes elderly parents, a floater plan can be very risky. Older individuals are more likely to need medical attention. If a senior member has a major health issue and uses up a large portion (or all) of the shared sum insured, it leaves the younger members of the family dangerously exposed with little to no cover for the rest of the year.
Pro-Tip: A smart strategy for families with dependent parents is a hybrid approach. Buy a family health insurance plan for yourself, your spouse, and your children, and purchase a separate individual or senior citizen health insurance policy for your parents.
Think About Pre-Existing Conditions
If a family member has a chronic illness like diabetes, heart disease, or a history of critical illness, they are likely to make more claims. Including them in a family floater could put the rest of the family’s coverage at risk. In such cases, a separate individual medical insurance plan for that person is a much safer bet.
Look at the Sum Insured Requirement
With a family floater, you need to choose a sum insured that is large enough to cover the potential worst-case scenario, such as more than one family member getting hospitalised in a year. While the premium is lower, you might need a higher total sum insured compared to what you’d buy for an individual, just to be safe. In an individual plan, the sum insured is locked in for each person, which offers an enhanced sense of security.
Final Thoughts
There is no magic formula to determine the single best plan. The ideal health insurance plan is the one that best matches your family’s reality. The choice between an individual plan and a family floater is a trade-off between cost-effectiveness and the security of dedicated coverage.
Take a moment to evaluate your family. Are you a young, healthy unit? A family floater is likely your most sensible and affordable option. Do you have members with higher health risks? A combination of individual plans might provide the robust protection you need.
Whatever you decide, the best way is to act. Having a good health insurance policy is non-negotiable in today’s world. It is the best defence against the crushing blow of out-of-pocket medical costs. It is important to pick an honest partner, like Niva Bupa, when planning the future of your family. Niva Bupa has various plans that cover all your medical needs across an extensive network of more than 10,400 hospitals. Having guaranteed you smooth claim processing, they assure you the comfort of knowing that you have a reliable insurance partner at your point of need. Guard your family members with Niva Bupa’s health insurance plans today.