Your health cover’s best left floating

The incidence of chronic diseases has been on the rise all over the world in recent years. People have been spending large amounts of money treating various kinds of diseases. The cost of medical treatment, too, has been rising.

This is where medical insurance can come in handy. By spending a small sum on a healthcare policy on a regular basis, you can undergo expensive medical treatment without having to worry about your precious savings getting eroded.

As in any booming economy, India’s economic growth is being driven largely by the middle classes. Notwithstanding the increased spending capabilities, we are aware of every rupee that goes out of our pockets. We are constantly on the lookout for the best product in terms of cost as well as returns. It is no different with insurance, health insurance in particular.

A relatively new type of health insurance plan called the floater health insurance plan helps you get the maximum benefit for money spent. This is a health insurance plan where all members of a family can be covered under the same plan for a single premium, with the sum assured available to any one member or to all members in case of any eventuality during the term of the policy.

The policy covers medical expenses incurred as an inpatient during hospitalisation for more than 24 hours, including room charges, doctor surgeon fees and medicines, etc. This policy also covers expenses 30 days prior to hospitalisation and 60 days post hospitalisation.

So, what is the difference between the regular health insurance plans and Floater health insurance plans?

We can study this with an example. As the table shows, a family of three - husband (34 years), wife (33) and child (6) - with a regular health insurance policy pays a premium of Rs 7,580. The same family will have to pay only Rs 6,024 if they opt for a floater policy.

In case of the regular health policy, you have to specify the sum insured against each family member. In the event of a claim, if the expenses move beyond that amount, you have to bear the difference. The floater policy, on the other hand, provides each family member the benefit of the entire sum insured under the policy.

In the example above, when the claim amount increased in the daughter’s case, only the amount up to her respective sum insured would have been paid. In case of the floater plan, however, the full claim would be paid since the total sum insured of the family was Rs 3,00,000, wherein all members of a family were covered under the same plan for a single premium. The sum assured was available to any one of these three persons or to all the three persons in case of any eventuality during the tenure of the policy.

There is an upper limit in floater health insurance plan coverage, of Rs 3 lakh.

Floater plan has some additional benefits, such as:

- Free health checkup coupon for the senior most member of the insured family

- An option for 2-year cover that offers a continuous 2-year protection with no increase in premium in the second year. This one-time payment of premium for 2 years takes care of your renewal hassles for next year. The 1-year cover is also available

- No health check up required up to the age of 45 years (as on last birthday).

- Income tax benefits under section 80D, which from the current financial year has increased from Rs 10,000 to Rs 15,000 as deduction from the total income; Rs 20,000 for senior citizens.

Policy exclusions

All health policies have the following exclusion: Medical charges incurred, except those arising out of accidental injuries, within the first 30 days of the commencement of the policy cover are not covered. This clause does not apply to subsequent renewal (without a break) of this policy.

The floater policy is based on the probability of the number of people in a family falling ill during the year. A young family has a lower probability of falling ill. Therefore, the floater policy can be an effective cost-saver. As the age increases, you should start looking to migrate to individual sum insured policies.

Source: DNA Money