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Does Family Size Impact Your Health Insurance Cost? How does family insurance work?

For people with large families, it is mandatory to secure each family member’s health with the help of health insurance or medical insurance as it is also called. However, equally important is protecting the wallet from getting depleted. That is why; one of the best ways to keep both the family members and the bank balance healthy is buying a family health insurance plan; also known as a family floater.

What is family health insurance?

Family health insurance is popularly known as family floater and it is specially designed to provide financial coverage towards medical expenses for the entire family. In family plans, all members are protected under a single umbrella policy. Each member who is a part of the family floater policy is insured for the entire sum insured of the particular policy and is eligible to the whole sum insured. However, the overall sum is shared amongst the members in any particular year.

Most family health insurance plans provide coverage to self and spouse, children, and parents. Many insurance companies also offer family floater plans that cover in-laws, siblings and grandparents too. Different insurers may offer different kinds of family floater plans. In a family health insurance plan, the sum insured can be used by all the members if needed or any of the members. 

Family health insurance – not a luxury but a necessity

Medical expenses are on the rise for most families. Every member’s health care needs are different and changes with age. The rising medical inflation is a big concern for families. Moreover, incidents of critical illnesses, lifestyle diseases and other uncertainties pertaining to health are increasing on a continuous basis. 

Families have members of all age groups – young and old. While the young may be healthy, accidents and health uncertainties can knock at anyone’s door. More often than not, it comes without any prior warning. Older people are more vulnerable and there is a high probability of hospitalization as they age. In such conditions, health insurance is a necessity. Here are a few reasons that health insurance via family floaters is a must-have.

Here are some reasons why families must buy a family health plan:

  • To be prepared for health related emergencies
  • For financial safety and safeguarding savings
  • To beat the high levels of medical inflation

Types of family Mediclaim plans in India

There are different types of health insurance plans available for families. 

Critical illness health insurance

Critical illness insurance plans are specially designed to provide financial coverage against critical illnesses. These include terminal illnesses like cancer, kidney failure etc. They are available as individuals or for family. Many family floater plans provide the feature to purchase critical illness health insurance as part of the family insurance policy.

Critical illness plans for family provides coverage for diseases such as cancer, diabetes, cardiovascular diseases, hypertension, kidney failure, and paralysis and all these are included in critical illness plans. The premium for critical illness plans is usually on the higher side as the risks of life and high expenditures are higher in these ailments. 

Mediclaim insurance

Mediclaim insurance plans are comprehensive plans that provide coverage for hospitalization expenses. These plans are available for individuals and families. Mediclaim insurance is designed to cover medical costs arising out of medical emergencies up to the sum insured. 

It must be noted that Mediclaim policies do not cover critical illnesses. Mediclaim plans are available for a specific tenure. Mediclaim insurance policies are cost-effective, as typically, the sum insured is lower and the term is limited. Due to these two factors, the premium of Mediclaim plans is low.

Factors to consider for buying family health insurance 

Coverage: Health insurance is an investment, but it could turn into an expense if not purchased with care. It is, therefore, important to first assess the healthcare needs of all the family members. Young couples must consider family planning and maternity health insurance. Elderly parents, young children, siblings, and senior grandparents – all have different healthcare needs. 

Sum assured: The sum assured or the coverage provided under a family health plan is essential. Take into consideration the current healthcare expenses, the future probable and sudden accidental costs. Don’t forget to factor in inflation. In India, medical inflation accounts for the highest share in the overall inflation. When buying a family floater plan, it is vital to determine a suitable coverage amount sufficient to cover huge expenses.

Flexibility to increase sum insured: Family health insurance policies offer flexibility to increase the sum insured. Hence, if a family wants to increase the sum insured after buying the policy, they can do so without too much of additional cost. This flexibility also allows the family to be free of stress and makes the process of health insurance much more manageable.

Cashless hospitalization: Cashless hospitalization can ensure that families do not have to touch their personal savings money at all. With the cashless claim option, the insured under the family floater plan can receive medical treatment without paying for the expenses to the hospital. In a cashless claim, the health insurance company directly makes the payment to the hospital. However, this facility is available only when the insured chooses one of the hospitals from the insurer’s approved hospital network. 

Family health insurance cost – what does it depend on and why?

The cost of a family floater plan depends on a plethora of factors:

The sum insured: If the sum insured is high, the premium will be high. Usually, policyholders prefer to have a family health insurance plan of a high sum insured so that the policy can provide enough protection to each of the family members under the plan. That is a good idea.

Co-payment: Co-payment is a feature where both the insurer and the insured have to pay part of the claim amount. Hence, family health insurance plans with copayment features would mean that the premium of the policy might be less but the insured will have to pay from out of pocket. That is a trade-off you need to measure and take a call on.

Sub-limits: Many health insurance plans have sub-limits. These are limits applied to specific expenses. For example, there can be a sub limit on room rent charges or ambulance charges. In this case, the insurance provider will pay the amount only up to the limit. Any amount above the limit has to be paid by the insured.

Add-on coverage: Many health insurance plans provide add-on and riders features with the help of which, the policyholder/s can avail of additional coverage. For example, a policyholder can have maternity insurance as an add-on cover under a family health plan. This would increase the premium accordingly. 

Family size: The more the number of family members under one family Mediclaim plan, the higher the sum insured should be and the more the premium would be.

Benefits of family health insurance plans

No financial stress: Many people, especially those with a large family of dependents, face regular and frequent medical expenses. Having a family health insurance plan can provide financial coverage in the event of medical emergencies leading to hospitalization. With family health insurance, one can avail of quality hospitalization without financial stress.

Add new family members at ease: Family floater plans offer greater flexibility than other types of health insurance plans. New family members can be easily added to family floater plans depending on the plan and clauses mentioned in the plan. 

Affordable premium: Family floater plans are cost-effective and more affordable compared to individual plans. A family floater plan premium is cheaper than paying a premium for each family member’s individual plans. By having a family plan, you will not need to pay different premiums for every family member. 

Health insurance cover for parents: Family health plans are a good way to ensure coverage for the entire family, including parents. While most family floater plans have a limit of 4 or 6 members,  some plans even offer coverage for extended family members such as parents-in-law, siblings and grandparents. In some plans, the count can go up to 16 members in one policy. 

COVID-19 health insurance for family: With the risk of the current Coronavirus, family floater health plans ensure that every member is protected against expenses that come with COVID-19. 

Tax benefits: Family floater plans provide tax deductions under Section 80D of the Income Tax Act. Families can avail up to Rs 1 lakh tax deductions when tax benefits of all family members are combined. This is an exemption that can be deducted from the taxable income so the actual tax benefit will depend on the tax bracket the assessee is in.

FAQs: Family Health Insurance

Is there a minimum and maximum age for buying family health insurance?

Most health insurance companies in India have an age limit for entry and exit and maximum buying age. However, this depends on the type of health insurance plan. From a one-day-old baby to a teenager to a senior citizen aged 90, anyone can have a health insurance plan.

How much health insurance sum assured is ideal?

The sum assured requirements for different people are different, depending on the policyholder's age, health conditions, and medical history. It is not a rule of thumb, but experts suggest that most urban dwellers should have a sum insured of at least Rs 3 lakh to 5 lakh. With healthcare costs rising steeply, year-after-year, it is advisable to have a more significant sum insured of up to Rs.10 lakhs or Rs.20 lakhs. Hence, for a family floater plan of 4 to 6 people, a sum of Rs.50 lakhs or more should be a good investment.

Why is health insurance important in a family financial plan?

Health insurance can help provide financial support in times of emergencies and to meet the high costs of expensive medical treatments. These expenses can leave a huge dent on the pocket and eat into your life savings if not planned for. Health insurance plans can provide adequate sum insured for retired people who depend on their corpus or pension for regular income.

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