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Family floaters: Do they work?

How you can cover all your folk

Family floater policies are an enhanced version of the mediclaim policy. The sum insured value floats among the family members. Most of the policies will cover husband, wife and a couple of children; some may cover parents too. The coverage for the entire family is limited to the sum insured. The family floater mediclaim from banks have a maximum sum insured of Rs5 lakh. The premium for family floater plans is typically less than that for separate insurance cover for each family member. Moreover, the premium of family floater mediclaim from banks is lesser than a family floater purchased directly from an insurance company by about 50% (in many cases). If a family of four (two children) takes a family floater of Rs5 lakh, they can claim up to Rs5 lakh of medical expenses in one policy year. If one person is hospitalised and gets a claim paid for Rs3 lakh, there will be only Rs2 lakh worth of medical expenses that can be reimbursed in that year. The next policy year will start with a fresh Rs5 lakh. A family floater makes sense for a family because, that way, each one in a family gets a big cover and the probability of more than one family member getting hospitalised in the same year is too low unless the whole family is travelling together most of the times in a year or has a history of medical problems that can happen concurrently.

Advantages:
•    It is less expensive than an individual mediclaim policy.
•    You can add your immediate family members like your spouse and kids. Oriental ‘Happy Family Floater’ will cover parents or parents-in-law too.  
•    It is great for younger families with members having low health risk.
•    Instead of individual mediclaim of Rs3 lakh, if the family opts for a floater of Rs6 lakh, they will benefit if there is a big claim in a year of, say, Rs5 lakh.

Disadvantages:
•    Some family floaters like Star Health–Family Health Optima have a maximum age limit of 60 years. They may offer portability to a senior citizen mediclaim plan after the policyholder completes 60 years, but it is better to find a family floater that has maximum age of 75 years (or more).
•    Instead of an individual mediclaim of Rs3 lakh, if the family opts for a floater of Rs6 lakh, they will lose if total claims from different family members are more than Rs6 lakh, even if individual claims are less than Rs3 lakh.
•    Most policies are silent about renewal in case the proposer  dies. The spouse may be elderly at that age—and may not easily get an individual policy. Moreover, the PED waiting period will start afresh, unless continuous coverage is allowed for an individual plan by the insurer.  
•    An elderly family—with higher medical needs—will benefit from individual mediclaim.

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