Cannot renew family floater if the primary insured dies

You can go without a life cover . Provided you don’t have anyone financially dependent on you. However, there is no excuse for not having a health cover. This is not just because of the mounting health care cost. Financial advisors are justifiably concerned that an unforeseen hospitalisation can upset your financial health beyond repair. So, don’t wait for a good time to buy a health cover. Just grab it. However, if you are planning to combine your need with your family’s, it is better to check these points before zeroing in on one health plan.


Individual versus family floater : You should ideally buy an individual policy for every family member you are financially responsible for rather than a family floater. This is because if you buy an individual policy of, say, `5 lakh each for all members of your family versus buying a family floater of `5 lakh each, the cost differential is not too much. Also, it becomes very small as the age of the senior most member crosses 45 years.
Let us consider the family of four members – father, mother, son and daughter — to bring out how the individual and family floater plan really works.

Example 1 : If you take a family floater policy for `5 lakh or take individual policy of `3 lakhs each for each of the members. If the mother falls ill and is hospitalised and the eligible hospitalisation expenditure is `4 lakh, then in the family floater the entire sum will be payable versus in the second alternative, where only `3 lakhs will be payable.

Example 2: If individual policy had also been for `5 lakh each, then there would have been no impact on individual claims but the overall cover will be much higher. To understand this, let us say apart from the mother (who fell ill and incurred eligible hospitalisation expenditure of `4 lakh), the father was also hospitalised and incurred an expenditure of `3 lakh. Now, in this case the family floater of `5 lakh will only pay a total of `5 lakh versus the full amount of `7 lakh being paid if the members had taken individual policies of `5 lakh each.

The cover is not the only problem. Whatever little you save on premium also comes at a high price. In case the primary insured member of the family reaches the maximum age of renewability or he/she dies, the whole policy is closed and even the members who are still younger/survive cannot renew the same policy and have to buy a fresh policy that they may or may not get. After a certain age, the children cannot be a part of the family floater. The age generally varies from 21 to 25. After this age, the children have to buy a separate policy for themselves which they may or may not be able to get.

Both these conditions can leave the family uninsured for any risk arising out of hospitalisation. And it is quite a possibility that getting insurance at a higher age is not possible anymore due to various health conditions that may developed in the meanwhile.

By Harsh Roongta CEO, Apna Paisa