Thursday, June 28, 2012

Why family floater policies offer you more for less

Insurers, it seem, believe that getting a family insured together is the best way to address the healthcareconcerns of people. Also, it makes perfect business sense for them.
No wonder, insurance companies are promoting family floater policies heavily and the policies have become quite popular with many, as buying a floater policy is cheaper than buying individual covers for each member of the family.
"Suppose a family of three wants to buy health insurance. Depending on the age of individual members, the family floater plan for 4 lakh is likely to be cheaper than the three individual policies of 2 lakh each," saysDamien Marmion, CEO, Max Bupa.
"Buying a 3 lakh floater policy is better than buying three 1 lakh individual policies, each for a family of three, specially in scenarios where just one or two of the three make a claim.
Having a floater enables the family members to claim access to a larger shared pool, than individual covers," says Mahavir Chopra, head, e-business, Medimanage, a health insurance broking firm.
This is considering the low probability of the entire family getting hospitalised in a single year. Therefore, experts argue, family floaters provide sufficient coverage for the entire family, particularly for the young and the healthy ones.
The Limitations
However, the clincher for family floaters - better coverage at lower premiums - would be turned on its head if one of the family members has an adverse health history. For example, if a family member is suffering from cardiac problem, the likelihood of claims being made is quite high and so is the possibility of a higher claim amount. Consequently, other family members would be left with little or no cover for the rest of the year.
"If one person exhausts the limit, everyone else in the policy is exposed," points out Antony Jacob, CEO of Apollo Munich. "Where the risk profile of one of the members is high, a separate cover is advisable for him or her. Or, you can also look at a floater of more than 6-8 lakh. A cost-benefit analysis will have to be done by each family to arrive at the right combination."
The middle path
To get around the exhaustion obstacle, some companies offer family floaters with a host of flexible options. Companies like L&T Insurance, Apollo Munich, Star Health and Max Bupa have designed products that reinstate the sum assured in individual as well as family floater policies, subject to conditions.
For instance, L&T Insurance's product promises replenishment of cover in case of accidents and double the sum assured for critical illnesses. Apollo Munich and Star Health restore the cover if the second claim pertains to an ailment unrelated to the first one, or is made by another family member. Max Bupa's family product provides a combination of individual and floater limits.
Choosing a floater
Keep healthcare inflation in mind while buying and enhancing your cover every year. Try to increase it by 2 lakh at least once in two years. "The city you reside in is also an important factor as the healthcare costs are not the same everywhere. A 5-lakh floater may hold good in say Madurai but will fall short in Mumbai," says Jacob.
Points to remember
Many individuals often express doubts about the policy's continuity upon the proposer's death.
Such reservations, however, are totally unfounded. "Any other eligible floater member can write to the insurer, seeking to be the new proposer and the cover will continue," explains Chopra. Another form of exit could be the insured children crossing the upper age limit prescribed for them.
Here, the premiums for other policyholders come down. The exiting policyholder should opt for an individual cover immediately, be it with the same insurer or a different one. Given the low-risk profile of young individuals, insurers will not hesitate to issue policies at cheaper premiums.
This apart, if you are dissatisfied with your insurer's services, your family has an option to switch to another insurer, collectively or independently. Thanks to portability, you can retain your continuity benefits and need not wait for four years to get the pre-existing diseases cover.
However, understand the nitty-gritties of the process, particularly if you are migrating from individual covers to a family floater. That is, if you and your spouse have standalone covers of 2 lakh each and you wish to shift to a family floater of 5 lakh, the continuity benefits will be capped at 2 lakh per person.
Source : ET


ashutosh said...

No wonder, insurance companies are promoting family floater policies heavily and the policies have become quite popular with many, as buying a floater policy is cheaper than buying individual covers for each member of the floater health insurance

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