Non Life Insurance - Should you include parents under family health insurance or opt for individual health covers?

Health insurance was once an avenue of financial planning that we steered away from, relying mostly on our official health cover alone; but how things have changed! The interest in this tool has seen a significant upswing in the past few years. As the global pandemic gripped us, more and more people understood how much a reliable health insurance cover could help one stay protected, especially in these uncertain times. In just the first quarter of the financial year, health insurance contributed to 29.7% of all premiums collected, a General Insurance Council report observed. The premiums collected for individual policies increased by 34%, while those on group policies witnessed a 16% increase.

But this understanding and clear rise in health insurance’s popularity brought with it an array of questions. What is the ideal health insurance cover? How do we choose a health plan? And perhaps the most important of all - Will family health insurance cover parents adequately? Or should we invest in individual senior citizen health insurance policies for our parents? Well, here’s an easy analysis of family health insurance vs individual health plans that will help you make better-informed choices.

What is a Family Health Insurance Plan?

A Family Health Insurance Plan or Family Floater Plan as the industry refers, is a single premium health cover that protects your entire family and is an excellent solution for anyone who is just starting a financial plan or might have limited resources available for investments. There are various pros and cons to investing in a family floater plan. For starters, the option of having a blanket cover for your family if any illness comes knocking. However, since it is a floater cover, the insured sum will be shared between all family members.

For example - If Sachin takes a floater cover of Rs 5 lakhs for his 5-member family (Mom, Dad, Wife and Son), then it is the only amount that will be available for all the members together. Suppose in one year, Sachin’s mother has to undergo a knee-replacement surgery (averaging at around Rs 4 lakhs), the remaining cover for the family will only be Rs 1 lakh. In addition to this, any health insurance claim made due to a health emergency of one family member will lead to the Cumulative Bonus being nullified. Cumulative Bonus or a no-claims discount is a common way that insurance providers use to reward you for maintaining good health. If you have not made any claims on your family health insurance you gain a Cumulative Bonus in your next policy renewal which provides an enhanced sum insured directly proportional to your CB value.

Individual Plans for family members

On the other hand, if we invest in dedicated insurance plans for all family members, each member has a defined insurance cover to help tackle their medical costs. This simple switch will ensure that all your family members can receive the medical attention they require with adequate cover. In addition, if some members of the family with individual covers do not make any claims, they can benefit from the No Claims Bonus, which helps reduce your premiums in many cases.

In the same example, we took above - let’s say Sachin had a dedicated health insurance policy of Rs 5 lakhs each for his mom and dad, and opted for a family floater plan for himself, his wife and their son. In this case, the entire family will have a total cover of Rs 15 lakhs. Therefore, even after his mother’s knee surgery, the other family members would still be adequately insured.

Rising Healthcare Costs & Senior Citizen’s Health Insurance

The cost of primary health care in India has been on the rise. This is especially true in private hospitals. According to a study, a hospital stay in a private hospital can cost as much as 6 times of a government hospital! The pan-India study considered everything from various cardiovascular conditions that have become more prevalent to basic hospitalisation for weakness or accidents. For example, a one-day stay in an ICU in Bengaluru costs Rs 1,500 in a government hospital while it can go up to Rs 30,000 in private hospitals.

However, considering the easy access to private hospitals, people are sure to choose this option. And these rising expenses can be managed better with the help of cashless health insurance, which removes the financial stress that often comes with any illness. Dedicated senior citizen plans like Bajaj Allianz General Insurance’s Health Insurance for Senior Citizens offers an array of benefits that makes it a go-to choice to protect family elders. From a cover for pre-existing conditions to a cashless facility in more than 6500 hospitals across India, the Health Insurance for Senior Citizens carefully packs together everything that keeps our parents safe.

Let’s Talk Premiums

One decisive factor in choosing between family floater plans and individual health insurance has to be the premium. And while the idea of having a single-premium health plan is sure to ease the process, there are various other factors you need to consider. For starters, the premiums of a family health insurance depend on a variety of factors like - number of family members insured, the age of the oldest person insured, etc. Therefore, family health insurance plans make the most sense for a young and budding family, where you are the primary insured member. In fact, the premium for family insurance in these cases can be extremely pocket friendly and can be computed with an online health insurance premium calculator.

On the other hand, the cost of individual health insurances is heavily dependent on the age of the person and their habits and pre-existing conditions. So while the senior citizen health insurance plan may be more expensive, it is an investment worth making, considering the cost of hospitalization. A dedicated health insurance cover for your parents (67-year-old dad & 59-year-old mom) will approximately be around Rs 52,000*. Meanwhile, emergency hospitalization can often lead to hefty bills that can easily surpass this premium cost.

So What Should You Do?

Considering all these factors, it is clear that opting for a dedicated senior citizen’s plan is the most reliable way of securing your parent’s future healthcare needs. This not only offers a more comfortable bucket for your family, but can also help you save on taxes. Premiums paid towards your parents’ insurance policies qualify for deduction under Section 80D of the Income Tax Act, 1961. The fact that plans like Health Insurance For Senior Citizens are crafted particularly for the elderly, they can help them get through age-related ailments with as much comfort and as little stress as possible.

This does not, however, mean that you don’t need family health insurance. Family floater plans like Health Guard by Bajaj Allianz General Insurance is perfect if you are starting a family or have a young child. The premium for a family floater plan of Rs 5,00,000 for a young family of three (husband, wife and a child) will be around Rs 18,000(it will vary depending on the terms and conditions and cover selected), which is extremely economical. With features like maternity or newborn cover, it is a policy that is crafted for a young and growing family. Additionally, since you cannot take an individual cover for your child, the family health insurance ensures that they are protected, and you are well-prepared in case of any medical emergencies.

Source : Times of India back