Family Floater Policy is most advocated policy in health insurance. In this article we are going to discuss all the aspects of the Family Floater Policy. Family Floater Policy is a single policy to cover all the members of the family. All the members can benefit by the floating limit (means that coverage limit float among all the family members and any member can use the entire coverage limit) with low premium and family discount.
Why go for Family Floater Policy?
- Low Premium – Saving on total premium cost is the biggest advantage of Family Floater Policy. For example, if in a family, husband (35 years), wife (32 years) and one child (aged 5), the premium for a four-lakh policy works out to Rs 10. If this amount is split among three persons, by opting for individual policies, the premium works out to be around Rs 10. But the sum assured for each individual is much lower in that case. Family Floater will generally cost 40 % cheaper than normal policy as explained above .This is the reason that this product is becoming popular.
- Higher Claim Limit – For example, if in a family, there are three members, husband, wife and son. If they take individual health insurance policy, then the sum insured for every family member say Rs. 1 lakh. In this case every family member can lodge claim to maximum limit of Rs 1 Lakh. If the family comprises of 3 family members then each member can claim only Rs 1 Lakh. Alternatively if the above family go for Family Floater, which means that all 3 family members can be covered for agreed amount say Rs 3 Lakhs. In this case any or all family members can lodge as many claims but total claim payable during the year for the whole family will not exceed Rs 3 Lakhs.
- Family Discount – 5% discount family discount on premium will be given for a family of more than 2 members. So if a family of four taking a family floater policy they have to pay Rs. 10000/- (10000-2000) as premium , so straight forward they save Rs. 2000/-.
- Cumulative Bonus – If the insured person does not lodge any claim in the expiring policy, he is entitled to 5% cumulative bonus for every such claim free year subject to maximum of 50% cumulative bonus that means the sum insured under the renewed policy will be increased by 5% every year without charging any additional premium. Cumulative bonus will be lost if the policy is not renewed on or before the date of expiry.
- Health Check-up – Free Health check-up is funded by the insurance provider, after completion of four claim free years. Health check-up provisions is applicable only, if the health insurance policy is continuous without break. Health check up benefit will be accrued after completion of three years continuous claim free insurance.
- Medical Tests – No medical tests required for proposer, if he is below 45 years of age and sum insured he is opting for is Rs.10 lakh.
- Easy to Manage – Because it a single policy, so easy to manage policy renewal. You just need to remember one date, instead of three or four for family of three or four members respectively. Some health insurance policies renewable life time, some of them are till 70 years; so keep this thing also in your mind in selection of health insurance company.
- Tax Rebate – The general deduction under Sec 80 D is available for each taxpayer is Rs.15,000, for self, spouse and children. An additional deduction for parents is Rs. 15,000. If any of your parents is for a senior citizen, then one can claim an additional exemption of Rs.5,000. So the total deduction is Rs. 20000 (15000+5000)
Limitations of Family Floater Policy
- A single big claim by any one of the family members can exhaust the complete cover limit. As a result, other family members will have less or no coverage for the rest of the year.
- The policy cannot be renewed if the senior most member crosses the maximum eligible age as mentioned in the policy. Currently, the rest of the family will have to go for a fresh policy. This will result the increase in premiums for the family members, who have crossed 40 years of age.
- This above logic also applies to children who cross the maximum age, which is 25 years in most policies. Again for this, the child has to opt for a separate policy.
- Like a regular policy, the renewal premium shall be calculated as per the age of the senior most insured member as covered under the policy.
- A loading may be charged on the premium in case there is a claim in the expiring policy. For instance, ICICI Lombard charges a loading of 10% for claims in the range of Rs 25,000 to Rs 50,000 and it increases to 20% for claims in the range of Rs 50,000 to Rs 1,00,000, 50% for claims in the range of Rs 1,00,001 to Rs 2,00,000 and 75% for claims above Rs 2 lakh.