Health Insurance can play a key role in risk mitigation when drawing up a financial plan. A good Health Insurance policy takes care of all hospital expenses during any illness. Choosing the right product thus holds importance as it saves one from burning a hole in his/her pocket in case of a sudden illness.  There are two kinds of variants that every health insurer provides – individual health policy and a family floater health policy. It is important to understand both before making the choice.

Let us compare the two for a better understanding and to make an informed decision.

Individual Health Insurance Policy

As the name suggests, an individual policy covers the health risk of an individual/proposer only. Premium for the policy is determined based on the age of the proposer. Individual Health Insurance policies are beneficial for those who are at a high risk of getting health problems.

Family Floater Health Insurance Policy

Family floater policies are designed to collectively cover all family members including the proposer, spouse and dependent children under one cover.

Individual Health Policy Vs Family Floater

Here are a few points to keep in mind before opting for either of the insurance plans.

Claim Benefit

Individual health policy covers each family member separately so each of them would have a dedicated sum assured. So, even if someone in the family exhausts his/her health insurance limit, the rest of the members still have their sum assured intact.

In a family floater policy, the sum assured is shared by all family members. For example, say a family of four people are insured under a health cover of Rs 5 Lakh. If any of the family members uses Rs 3 Lakh from the health cover, the rest of the members will remain with only Rs 2 Lakh cover for the remaining insured period.

Cost Of Policy And Renewability

The premium under family floater policy is based on the age of the senior-most member, so the premium would increase as the age of the senior member nears 60 or 65 years. Renewability of family floater policy is allowed up to a certain age only.

So, if any of the family members is prone to a certain ailment or if one or more members in the family are senior citizens, it is better to take an individual policy. There is no age limit for individual policy renewal.

NCB Impact

Health Insurance companies offer No Claim Bonus (NCB) every year for not making any claim in that particular year and some companies give up to 100% NCB benefit by increasing the cover amount.

The chances of getting NCB in an individual policy is higher than that of a floater policy. This is because even if one member of the family makes the health claim, all the other members lose out on the NCB.

Which Policy Should You Choose?

If you are unmarried and have parents to take care of, opt for an individual health policy. However, if you have a family that includes members in the age group of 20 to 30 years, the family floater would allow you to get a higher cover at a lower cost. Once the senior-most member reaches the age of 50 or 60 years, you can port them to individual policies. If your family is susceptible to certain diseases or hereditary ailments, then it is better to opt for an individual health policy.

You must evaluate both, the floater and individual health policy and take the appropriate one as per your requirement and family profile.

(The writer is CEO, BankBazaar.com)