Building a solid health insurance portfolio


Arun Balakrishnan

A family floater is convenient to cover children. It makes sense for a small family consisting of the policy holder, spouse and children and where the members are young and healthy

With cost of medical care rising steadily, not having adequate health insurance for every member of the family can significantly strain your finances. Indeed, a medical emergency can completely derail your carefully laid financial plans. 

Often, working professionals, who have medical insurance provided by the employer, may consider it unnecessary to buy health insurance separately. However, although this can be very useful it is by no means adequate. If you quit or change your job, you may be left without cover. It is important to get insurance for the entire family, in addition to the cover provided by the employer. While we may be aware of the need to insure our health, it can become difficult to decide on the kind of policy that would suit best.  

Broadly speaking, family floater and individual health policies are the two options available in indemnity plans. A family floater is an umbrella policy which provides cover for the entire family. Family floaters may extend only to an individual and his/her spouse and dependent children or they may also include parents, siblings etc, depending on the plan and carrier chosen. The main advantage of family floaters is that they typically offer higher cover at a lower premium. Also, the plan offers flexibility as the overall cover can be utilized among the family as per the policy holder`s will. This means, if any one member requires hospitalization running up a large bill, the entire sum insured can be used to meet the cost.
 
However, there are certain points one must keep in mind while getting a family floater plan. The plan will only be valid till the senior most member insured attains the maximum age of renewability allowed by the insurance company. Post that, the floater can continue however, the senior most member would not be covered under the policy. Moreover, most policies become void if the primary insured or the senior most member dies. Thus, in this case the other members are left without a cover and also lose the benefit of good claim history and cover for pre-existing diseases which are applicable on continuous renewal of the policy. They would then have to take a fresh policy without the accumulated benefits.

Also, if any one member exhausts the entire sum insured in a particular event, this would render the others without cover.

A family floater is convenient to cover children. It makes sense for a small family consisting of the policy holder, spouse and children and where the members are young and healthy. Thus a person, who wishes to insure his wife, two children aged 2 and 4 and his parents, both of whom are above 55, can consider taking a family floater for himself, his spouse and children and individual policies for his parents who may be more prone to ill health and require higher cover. As his children grow up, individual policies can be taken for each member. Family floaters usually cover children uptil a maximum age of 21-25.

If you take a family floater policy, you can consider increasing the voluntary deductibles. This refers to the amount you have to pay out of your own pocket before the insurer meets the claim. This would put a smaller dent in the sum insured so that an event does not wipe out the cover for the rest of the members.

Over time, individual policies for each member are advisable to help secure each one’s health.

Next, you can opt for a critical illness cover. Such policies, available as riders with the indemnity health plan or as standalone policies, provide coverage for critical illnesses like cancer or a heart condition. Conditions such as these necessitate specialized care which costs far more than the cover available in an indemnity health plan. A critical illness could also lead to reduction in earning ability and drastically impact one`s lifestyle. These factors make it important to get a critical illness rider or policy as one`s age advances.

Keeping these factors in mind, build an appropriate portfolio of health plans with sufficient cover for the entire family and breathe easy even in times of a medical exigency. 

The writer is CEO, BerkshireInsurance.com

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