So you have decided to buy Health Insurance for yourself and your family? Now welcome to the billion dollar question – Should I buy a family floater mediclaim health insurance policy or an individual health insurance plan?
We’ve been asked the question on “which one is better” several times. And for many customers, their hearts and minds are torn apart in the confusion of making the choice between family floater mediclaim health insurance policy and an individual health insurance plan. It’s now time to put our thoughts into words. We’ve kept the article short but it is still verbose. Read each line carefully, the difference between the wrong and right choice can indeed be a question of a few lakhs of rupees!!! 🙁 That’s if you end up paying high medical bills from your pocket!
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At the face of it, a family floater mediclaim policy appears to be more beneficial for a family. However, there are several other considerations that need to be taken into account before taking this decision. Well, quite honestly not us, not you, you can tell which is the best option for your family only by hindsight. But there are indeed some logical ways in which you can make the decision between individual health insurance policy and family floater mediclaim policy easier. Even if you are at the point of renewing your existing health insurance policy, go through this framework – it will help you take a better decision.
| Parameter | Which Health Insurance Plan is Better and Why |
| Premium Comparison | If the premium of the family floater mediclaim policy is only about 5-10% lesser than that of all individual health insurance policies put together and with the same cover, then go for individual plans since it takes care of the probability of claims from multiple family members. |
| Life-stage of the family |
If you are a ‘young’ family, meaning where adults are in their 30s or lower, a family floater mediclaim policy can be a good deal. That’s because the probability of illness is low, and the probability of illness of multiple family members in the same year is even lower. But if the adults are in their 40s, that’s when lifestyle-related illness start showing up. So you could still go in for a family floater mediclaim policy but make sure that you starting beefing up the overall cover by 20-60% (depending on age) to ensure that just in case there are multiple or large claims or both, they can still be accommodated within the Sum Assured of the health insurance policy. If you are a ‘old’ family, meaning where the adults are in the 70s, 80s or beyond, a family floater mediclaim policy may not even be an option. Even if it is, the recommendation is that you take a separate plan for the senior members since their requirements will be very different from the other junior members in the family. |
| Probability of claims from multiple family members | Before you buy the health insurance policy, what is important for you to estimate is the probability of multiple claims in the family. If there is a high chance that there will be multiple claims (e.g. if most of the family always travels together, there is a chance that multiple family members could be injured in an accident, etc.), then individual plans may actually work out to be better since each one can claim up to his/her limit. In the case of a family floater mediclaim policy, the limit may run out with just one person’s claim and the person and the rest of the family members may not get the benefit and remain under-protected or unprotected for the rest of the year. That’s a dangerous situation and is best avoided. |
| One member of the family has a pre-existing illness that can be covered | In such cases, don’t include that person as part of the group. Take an individual health insurance plan for that person and let all other family members take a family floater mediclaim policy together. |
| High age difference between family members | Family floater mediclaim policy premium rates are hugely influenced by the age of the most senior member in the group. If there is one particular member who is of very high age, take a separate individual health insurance policy for him/her and combine all others into a family floater mediclaim policy. That may help you get substantially higher value of cover on the whole. Also, the senior member may need more benefits in his/her plan (e.g. specialized diabetes care) which can be offered in an individual plan. |
| Age of the senior-most family member | Family floater mediclaim policy stop once the age of the senior-most member reaches a certain maximum. Typically it is between 65 to 70 years. Beyond that, that person cannot participate in a family floater and will anyway have to buy a separate mediclaim plan. In doing so, the person will lose out the benefit of no-claims and good health history. You may want to consider this factor if the person is nearing that age group and go for an individual policy itself. |
| Age of children | Like in the case of the seniors, there is also generally a capping age for children as well. It is generally between 16 to 24 years. Once that is crossed, the premium changes and some plans do not allow them to be part of the family floater any more (some other new plans do). Consider the impact of that in the next few years, when buying your plan. |
| Impact on NCB (No Claim Bonus) | In a family floater mediclaim policy, even if there is 1 claim, the No Claim Bonus is lost. However in the case of individual health insurance policy, only that person’s policy is impacted, all others will indeed get their No Claim Bonus. Yet another factor to be considered beyond just the premium cost. |
So while family floater mediclaim policy may appear cheap at the face of it, you need to consider a lot of other factors when deciding on your health insurance. That along with the multiplicity of benefits offered by various companies, is what makes taking this decision a little confusing.
A Possible Approach
Start with a Family Floater Mediclaim Policy if you are a ‘young’ family and/or have no prior history of major illnesses in the family. In any case ensure that you take a slightly higher (about 50%) health insurance cover (e.g. Rs. 7 lakhs in the example in this article). If the adults are in the early 40s, and they still have no prior history of major illnesses, take a family floater mediclaim policy, but increase the buffer from 50% to about 80%. Also, use Recharge/Restore options, wherein even if there is a large claim in a family floater mediclaim policy, the original cover is restored back. Prefer Recharge/Restore options wherein it is triggered even for sum assured falling short in a particular claim, rather than only after it is exhausted.
Move on to Individual Health Insurance Policy (or a Combination) when either or all of these happen.
(1) one of the members reaches the age 45-48 years (risk of lifestyle diseases goes up significantly), and/or
(2) someone in the family gets an illness that is likely to recur, or have impact in the future, and/or
(3) when the premium of a family floater mediclaim policy becomes less than 15-20% higher than the sum of all individual health policies.
Start with a Family Floater Mediclaim Policy if you are a ‘young’ family and/or have no prior history of major illnesses in the family. In any case ensure that you take a slightly higher (about 50%) health insurance cover (e.g. Rs. 7 lakhs in the example in this article). If the adults are in the early 40s, and they still have no prior history of major illnesses, take a family floater mediclaim policy, but increase the buffer from 50% to about 80%. Also, use Recharge/Restore options, wherein even if there is a large claim in a family floater mediclaim policy, the original cover is restored back. Prefer Recharge/Restore options wherein it is triggered even for sum assured falling short in a particular claim, rather than only after it is exhausted.
Move on to Individual Health Insurance Policy (or a Combination) when either or all of these happen.
(1) one of the members reaches the age 45-48 years (risk of lifestyle diseases goes up significantly), and/or
(2) someone in the family gets an illness that is likely to recur, or have impact in the future, and/or
(3) when the premium of a family floater mediclaim policy becomes less than 15-20% higher than the sum of all individual health policies.
A Health Insurance policy is all about the claim and its experience. So finally, whatever type of plan you choose make sure that you check which companies have the best health insurance claims settlement ratio, and which ones take the least amount of time to process your health insurance claims.
Pradeep, of course we have all the time to answer customer queries. That’s why we exist. 🙂
Put simply, deductible is an additional contribution from your side beyond the premium.
The benefit to the insurance company is that it reduces the risk of fraud and also, they need to pay the claim amount only beyond a certain limit.
The benefit to customers is that they get a discount on their premium, which could be as high as 30-35%!
Whether to choose to pay a deductible or not is a question of probability of claim. If the probability is less in your view, deductible is a great option to go for.
Here’s the whole concept of voluntary deductible explained with examples.
https://www.mintwise.com/blog/voluntary-deductible-insurance-india/
this is amongst the best that i have read on this topic. thanks guys.
a question i have is related to using the deductible facility. how does it work and is it really worth it? do explain if you have the time. thanks in advance.
Good approach. thx for article.
Rita, there is honestly nothing called the best health insurance plan, else that is the only one that would sell. Please let us know your requirements and we can suggest some ideas on how to make the choice.
Rita, the plan you should buy depends on your individual needs and requirements. Use this calculator to find out how much you need.
https://www.mintwise.com/blog/calculate-life-insurance-coverage/
And this one to make the choice.
https://www.mintwise.com/blog/compare-online-term-insurance-plans-india-2014/
Hope this helps.
Hi. Your articles on health insurance are truly wonderful.
I am a single parent (one 7 year old son) and wanted to check which is the best health insurance plan in India. Do you have any suggestions please?
Hi. Your articles on health insurance are truly wonderful.
I am a single parent (one 7 year old son) and wanted to check which is the best health insurance plan in India. Do you have any suggestions please?
The approach suggested is superb. makes sense.
The approach suggested is superb. makes sense.
Ganesh, we will continue to churn out quality advice on Health Insurance since we realize that there is a lot of confusion on how to choose the right Health Insurance plan.
Thanks for your feedback.
Ganesh, we will continue to churn out quality advice on Health Insurance since we realize that there is a lot of confusion on how to choose the right Health Insurance plan.
Thanks for your feedback.
Very detailed analytical approach. good to read all articles in this website. please write more articles on Health Insurance including price comparison also. thanks to mintwise.
Very detailed analytical approach. good to read all articles in this website. please write more articles on Health Insurance including price comparison also. thanks to mintwise.