Should you buy a separate Insurance Policy for your Parents?
Due to the rapid developments in the healthcare industry and increasing costs of treatments, being able to afford quality medical care is becoming difficult. Which is why we have health insurance so an individual has financial protection and can avail top-notch healthcare services.
But even when it comes to choosing health care plans, you must be aware of every little detail so as to make a smart financial decision. For instance, if you are a family with parents who are senior citizens, it is recommended that you buy a separate insurance policy for your parents.
This can significantly reduce your health insurance premium which is dependent on the following factors:
- Medical history of the family
- Policy term
- History of the insured
- Method of premium payment
If you opt for a family insurance policy in such a case, you may end up paying high premiums and burn a hole in your pocket. Let’s understand how this happens.
What are family insurance policies?
A family insurance policy is a contract under which the insurance company covers various members of the family under a single plan. It is also called an umbrella policy. The policy offered to the members of the family is called the family floater insurance plan. The policy is extended to the family of an individual. A family floater policy may seem cost-effective but will not offer adequate coverage to each individual.
Under family insurance policy, the policy sponsor or typically the head of the family can allocate ratios to the members based on which the sum insured per person will differ. On the other hand, if not such a ratio is allocated the insurance company will grant the claim amount to whoever is making the claim first. The more claims being made, the lesser will be the sum insured.
Why you should not include your parents under family floater policies?
Various factors affect the premium of an insurance policy. As parents get older the assumption is made that higher the age, the more prone will be the individual to fall prey to various diseases. This poses a threat to the insurance company and so the insurer will charge higher premiums thereby making a family floater insurance policy expensive. Even though the premium charged will increase, the coverage will remain the same. To get a better understand, we will understand below the various factors that affect the premium of an insurance contract.
Factors that affect the premium chargeable on an insurance contract
As mentioned above, the age of an individual plays a vital role in approximating the risk associated thereby determining the premium chargeable. While deciding the premium chargeable, the insurance company determines the amount of premium based on the oldest person in the family insurance, and so it can lead to higher premium costs.
- Medical history of the family
If the policy purchaser has a medical history of their family suffering from a particular disease, then the insurance company may consider the case to be of high risk. If any member has faced a critical condition such as heart diseases, cancer, diabetes then it is also advisable that you purchase a separate critical illness policy to get yourself covered entirely.
- Policy term
The number of years of the policy’s existence matters. If the policy term is shorter, the insurance company will be charging higher premiums whereas, if the policy term is longer then the instalment payable is lower. The longer the insurance company gets to keep the money pooled in an investment, the higher will be the return thereby charging a lower premium to the customer and attracting long-term policies.
- History of the insured
If the insured has undergone a medical surgery or a challenging health problem in the past then the insurance company believes that in the future it will pose a risk and charge a higher premium.
The lifestyle of the policy purchaser matters here. It means that if the insured has a healthy lifestyle and a balanced steady diet then the insurance company cannot assume any future illness and will charge lesser premiums. On the other hand, if the individual has an unhealthy lifestyle, then the risk of getting exposed to the disease is high thereby, charging a high premium.
- Method of premium payment
If the insured has opted for paying a lump-sum amount for subscribing to the policy then the premium charged will be regular. In some cases, on payment of a lump sum amount, the insurance company offers a discount. Whereas if the insured has opted for paying premiums either monthly, quarterly, or yearly then the insurance company may charge some EMI or interest rate for breaking up the instalments.
Senior citizen Insurance plans
As your parents shall not be included in a family floater plan due to the above-mentioned reasons, one can purchase a separate senior citizen health insurance for their parents. Such a plan is created for people belonging to the age bracket of above 60 years. However, it is advisable that the policy should be subscribed at a younger age to save money on the premium. Higher the age more will be the premium charged.
How senior citizen insurance plans may be the best option for parents?
The various benefits offered under senior citizen plans are:
- Coverage –
Senior citizen insurance plans offer full-fledged security to your parents. The sum insured will be higher as the medical costs spent on treatment will be higher. As the medical inflation is rising day by day, the treatment expenses will be higher soon. Having huge coverage helps your parents to receive quality treatment.
- Expenses –
It is a fact that the expenses incurred for treating your parents or senior citizens, in general, are almost 4-times higher than for any other individual. Spending your savings for getting treatment may seem unfair as that money was being saved for a reason, and not having a senior citizen health insurance may disturb your budget.
- Support –
Senior citizen health insurance plans offer support and better assistance to the insured. After the retirement of the insured, he may not have much work to do, and a study says that elderly people tend to go into depression or face a mental breakdown. To avoid the above-mentioned situation, insurers provide support to the insured by offering healthy tips, a diet regime, and so much more to keep them occupied.
Costs covered under senior citizen insurance plan
- In-patient hospitalization –
If the insured gets hospitalized while facing a medically challenging situation, and if the hospitalization is for more than 24 hours then the insurance company will cover the treatment expenses.
- Pre- and post-hospitalization –
The expenses incurred before hospitalization for up to 60 days will be covered under pre-hospitalization expenses. The expenses incurred for doctor’s appointments and medicines will be covered under post-hospitalization expenses.
- Ambulance cover –
In case of emergency, if an ambulance is called up for, the insurance company will be covered under ambulance charges.
- AYUSH treatment –
AYUSH includes alternate forms of therapies like Ayurveda, Yoga & Naturopathy, Unani, Siddha and Homeopathy treatment. Most insurance policies consider the same as an alternative of the scientific treatments and cover them under the plan. One needs to read the terms and conditions first.
- Domiciliary expenses –
If the doctor insists that the insured needs to undergo home treatment then the costs incurred for the same are covered under domiciliary expenses. Under this one can also opt for cashless treatment.
- Recovery benefit –
If the insured is admitted for more than 10 days then as a recovery benefit to managing the household expenses the insurance company hands out a lumpsum payment.
It may not seem like an issue at the time of purchase but later on if due to certain emergencies and claims being made, you may not have enough coverage left. In case of a recurring medical condition being faced, the sum insured may be exhausted. If you opt for a separate policy at a later stage, the premiums chargeable will be higher. It is advised to always buy insurance at an early stage of your life or your parent’s life. No, the group insurance plan offered may not be sufficient. If buying a separate insurance policy may seem expensive then you can opt for a top-up plan. Top-up insurance provides additional coverage to the existing insurance plan and is offered are at a lesser premium. And if one can afford a separate insurance plan then one can opt for a senior citizen health insurance plan that offers unique benefits and is specially designed for your parents. Remember that your company coverage goes away the day you leave the job. The various benefits offered under senior citizen health insurance plans are:
I have a high sum assured, why would there be a problem if I keep my parents insured under the same plan?
My parents are covered under my company’s group insurance plan, is that enough? If not, which plan shall I choose?
What are the benefits of having a senior citizen health insurance plan?
The above-mentioned benefits apply to policies if senior citizen insurance policies are opted for at an early age.
It may not seem like an issue at the time of purchase but later on if due to certain emergencies and claims being made, you may not have enough coverage left. In case of a recurring medical condition being faced, the sum insured may be exhausted. If you opt for a separate policy at a later stage, the premiums chargeable will be higher. It is advised to always buy insurance at an early stage of your life or your parent’s life.
No, the group insurance plan offered may not be sufficient. If buying a separate insurance policy may seem expensive then you can opt for a top-up plan. Top-up insurance provides additional coverage to the existing insurance plan and is offered are at a lesser premium. And if one can afford a separate insurance plan then one can opt for a senior citizen health insurance plan that offers unique benefits and is specially designed for your parents. Remember that your company coverage goes away the day you leave the job.
The various benefits offered under senior citizen health insurance plans are: