Individual Health Policy Vs Family Floater Plan: Which is Better?

It Is very painful to see your hard earned money being spent on bills that are charged at hospitals. Therefore, having health insurance is essential for every member of a family since it pays for all your hospital bills.

However, when one requires purchasing policies for two or more members of the family, whether one should opt for individual health covers for each family member or a family floater health insurance policy for the family? Which plan is more useful in which situation? What are the benefits that can be derived from them and the disadvantages associated with them as well? This blog will be dedicated to such topics as individual health plans and floater health plans.

So firstly, let us know what they mean by individual health insurance policies and floater health insurance policies.

Individual Health Insurance Policy

An individual health plan is when a health insurance policy only covers one individual. The yearly premium is also paid depending on someone’s age and coverage in millions.

For instance, you are 55 years old and you purchase an individual health cover for yourself and another for a 78-year-old grandfather. It refers to Rs 5 lakh for both of the policies. Thus, the annual premium payable in your case would be Rs. 15,000 for your policy and Rs. 30,000 for your grandfather’s policy.

Family floater health insurance plan

This type of health insurance policy specifies the insured person as more than one member of the family. In other words, if you take a floater health insurance policy then it will cover you, your spouse, your children, and your parents – whoever’s name you want to add to the policy. This is the amount that you will be expected to pay before the floater health plan kicks in and it depends on the age of the oldest member you want to cover and the coverage limit that you want to take.

In a floater plan, the family receives a certain sum insured for a particular year and it can be claimed by any of its members. Yeah, let’s assume you have a Rs 10 lakh family floater health insurance policy for you, your spouse, and two children. Suppose further that when admitted into a hospital the cost of treatment that accrued to you was Rs 2 lakhs, and this was provided by floater health insurance policy. Currently, Rs 8 lakh can be made available to you or any other policy member named throughout that year.

Analogy Explaining Both the Concept

It has been said that the decision between the Individual Health Policy and a Family Floater Plan is similar to deciding whether to buy a ticket for each member for a train journey or a pass for the total number of family members.

Here, every member of the family has their ticket with an Individual Health Policy. This means that everyone is insured individually meaning that each individual is given a distinct sum insured. If one of the members gets sick, he is included in the ticket without having any impact on the rest of the family. It is almost as if each individual owns his/her own seat on the train, which makes it more private and advantageous but is costly since each person is treated as a separate passenger who must purchase a ticket.

On the other hand, a Family Floater Plan is similar to buying a ticket for the entire family, where all are covered under a single ticket. It shows that the sum insured is utilized by everyone, but if one falls sick or has an accident, the others may remain with nothing or little amount available for the rest of the trip. This option is cheaper than the other two plans while giving the opportunity to any member to employ the coverage whenever they want. However, where several members of the same family contract the disease at a given period, this can be a challenge as the insurance coverage is likely to be spread across everyone within the family.

Therefore, the decision of going for this plan or the other depends on the family’s needs and the money it has, just as it would for choosing between single passenger tickets and a group ticket when traveling.

Difference Between Individual Health Policy vs Family Floater Plan

Basis	Individual Health Policy	Family Floater Plan
Coverage	Covers only one individual.	Visits one family at a time and enrolls all the members of the family under one policy.
Sum Insured	Every person has his or her own particular sum insured.	The insured amount depends on the coverage agreed between the policyholder and the insurance company and it is divided amongst all the insured family members.
Premium Calculation	Premium is computed based on the age, health, and the amount of coverage the individual needs to have.	Premium is determined by the age of the oldest family member and the type of coverage that one selects.
Cost Efficiency	Higher in cases where the various members of a family take different policies.	Usually cheaper for families and for younger family-types in particular.
Claim Impact	By doing so, it is as if what one person says does not have an impact on the insured sum for the rest of the people.	A claim by one member is totaled to less the amount of sum insured for other members of the group.
Flexibility	Gives more options to select a variety of degrees of coverage for each member.	Both coverage and sum insured are the same for all the members of the plan.
Renewal Age	Can be renewed for each individual separately.	The renewal may also be determined by the age of the oldest member, which may be the potential of the whole family.
Best Suited For	People with elderly or ill members of the family because it offers services not limited to but which includes the elderly.	Families that are younger or those which have little or no health care needs they want met.
Example Scenario	It works on the basis that if one member of the policy becomes sick, then they are covered without any cross inconvenience to the rest of the family members, clients, or passengers.	Where one member uses more of the coverage there is less left over for the rest of the members of the family.

Wrapping Up

While opting for either the Individual Health Policy or the Family Floater Plan, the requirements of the family should be kept in mind. An Individual Health Policy provides each family member with selected benefits for a specific sum insured that is suitable for clients with certain health conditions, though expensive. On the other hand, the Family Floater Plan insures the entire family under the mentioned amount which is cheaper and preferred for young healthy families who have fewer incidents of claims. This involves taking a survey on your family’s health requirements, pocket, and risks to arrive at a decision on which plan best suits them.

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Disclaimer – This article is for educational purposes only and by no means intends to substitute expert guidance. Mutual fund investments are subject to market risks. Please read the scheme related document carefully before investing.