Buy your parents a separate health insurance policy; here’s why!

Keeping the rising medical inflation in mind, health insurance is an essential consideration for all families. Also, an ever-increasing number of potential health issues make the idea of a comprehensive healthcare policy attractive to many. However, there are various nuances to family health insurance policies that necessitate careful consideration. It may not always be beneficial to include your parents in your family’s health insurance policy.

Understanding why a family floater may not be a suitable option can allow you to make a conscious decision about the structuring of your healthcare policy’s coverage. Read on to learn more about health insurance plans for a family.

What is a family health insurance plan?

Also referred to as a Family Floater Plan, this is a health insurance option that protects an entire family rather than a single individual. Typically, these plans present a viable option for those with limited resources. The primary benefit of these family floater plans is the protection they afford to all members of the family. However, this comes with a notable downside. All family members share the sum insured; this could be problematic if there are several claims that result in exhausting the sum insured.

Reasons to not include parents in your family health insurance policy

If you have parents who are senior citizens, including them in your family health insurance policy may not be advisable. A few reasons for this are as follows:

1. Higher Premiums Due to Age

One of the primary consequences of including your parents in your family health insurance policy is the associated increase in premiums. Typically, a health insurance premium is calculated based on the age and condition of the individual protected under the plan. With a family health insurance plan, the premium is calculated based on the age and pre-existing conditions of the oldest member of your family. As your parents may face a higher risk of health issues at their age, the premium is substantially higher. The co-payments and deductibles (the amount you pay out of pocket) may also be higher. This can cause a financial burden for families.

2. Limited Coverage for the Rest of the Family

The sum insured under a family floater plan is shared amongst all members. However, with advancing age, your parents may have low immunity and become prone to illnesses. Therefore, it is likely that a significant portion of the sum insured may be utilised by your parents, leaving limited options for the rest of the family. The sum insured will typically not be enough if there are elderly individuals needing frequent medical attention, as this will exhaust the sum insured in no time.

For instance, let’s say your family has coverage for ₹5 lakhs. If your parents are prone to hospitalisation due to their health, they may claim over ₹4 lakhs in a certain period, leaving a smaller sum of ₹1 lakh in coverage for the rest of the family. Therefore, if there are multiple medical emergencies in a year, the sum insured may not be able to cover all family members, as a significant portion may be devoted to the care of your elderly parents

3. No-Claim Bonus Considerations

The No-Claim Bonus (NCB) in health insurance allows for long-term savings. If a policy year passes without making a claim, you are rewarded with a bonus that may be utilised to increase the sum insured at no additional cost (i.e., the premium remains the same) or avail of a discount during renewal/premium payment. Older individuals, such as your parents, are likely to make more claims during a policy year, preventing you from taking advantage of the NCB's benefits.

Alternative Coverage Options

Fortunately, although it might not always be advisable to include your parents on the same policy as the rest of your family, they can still benefit from individual health plans tailored to their needs. There are senior citizen health insurance plans designed to address the unique needs of people over the age of 60.

Conclusion

A family health insurance plan is an affordable option that covers all household members, including your parents. However, before purchasing a family floater, it is essential to go through the considerations and finer details. This will allow you to make the best decision to ensure adequate protection for your entire family.