Mediclaim- Floater or Individual Sum insured?

Deciding to take a health insurance is not the toughest decision; deciding on the sum insured is! The insurance market has different types of mediclaim on the offer. As a layman deciding which one you should take is a task when not properly executed may end up as a disadvantage for you and your family.

The two common options that are available are the floater policy and the individual mediclaim policy. Under a floater policy the entire family is covered under one sum insured. The sum insured floats among the family members and anybody in the family can utilize up to the maximum sum insured. Compared to this, under an individual sum insured health plan, each member of the family will have separate sum insured attached to them and can avail benefits only up to the individual limit. Floater family policies are comparatively cheaper than taking individual sum insured.

What is the confusion you may ask? Floater polices win hand down, don’t they? But in reality it is not. A person who is going solely by the criteria of premium will choose floater family policy. But if you are planning to use your mediclaim during an emergency think twice before you opt for floater.

Suppose a four member family has a sum insured of Rs. 4lakhs and one person (especially if it is an aged individual) uses up Rs. 3lakhs during a hospitalisation, then only the balance Rs. 1lakh is left for the other 3 members for the rest of the year. You may counter by saying that the chance of all the four members requiring hospitalisation is less.  But if it were to happen, then the other family members would be left without any cover. Another point to be kept in mind is that most companies have a limit on the total expenses incurred for any one illness. And in most cases it would be 50% of the sum insured per family. So in the above example even if you as a family have Rs.4lakhs as the cover, in reality a member can use only up to Rs.2lakhs for one event of hospitalisation. Then there are floater policies under which there are disease wise sublimits which are not present in an individual mediclaim policy.

The premium in a family floater policy is computed keeping in mind the age of the eldest member in the family. So in any family setup the children will end up paying the premium computed based on the parent’s age. On the other hand, in individual plans, each member pays the premium according to their own age.  Most companies offer cumulative bonus or no claim bonus on the policy when there is a claim free year. In the case of individual policies, even if one person of the family claims the other members would be eligible for bonuses, whereas under floater policy there are no such benefits.

Under family floater, sum insured cannot be increased beyond a level at renewals and often there is a capping on the sum insured that can be taken under floater plans. Floater policies cannot be continued after a particular age for most insurers or in case if it can be continued, the sum insured gets reduced automatically where as individual policies can be renewed lifelong in the present scenario.

So don’t go by the premium alone. We believe individual policies are better than floater policies.  And never see mediclaim as a waste if you have not claimed under it in a particular year. Thank God for mediclaim if you have a claim and thank god if you didn’t have a claim also.