Which is a better option: Multiple individual covers or family health insurance?

Summary: While we draw strength from our familial bonds, we also have to ensure that we protect our family members from all kinds of injuries and ailments. Health insurance with adequate coverage is a must to provide them with the best healthcare infrastructure during medical emergencies without looking at the expenses. There are two prominent options to do that — multiple individual covers and the family floater plan. Choosing between the two can be difficult as they both have advantages and drawbacks. That’s why you must assess your needs and budget before finalising the policy. Read on to learn how you can do that.

Seeing everyone happy and healthy in your family is a blessing. But one must remain realistic and plan for uncertain times as well. Accidents and ailments can come uninvited and ruin our physical, mental, and even financial health. One must buy a health insurance plan to ensure that the focus remains solely on quick recovery and not on mounting medical bills. Now, it can be confusing to pick the right type of plan — should you buy separate individual plans for your family members or get them all covered in one family floater plan? Let’s discuss this in detail before you shop for insurance plans.

What is an individual health insurance plan?

An individual health insurance plan is a policy that is meant to cover a single person. It offers comprehensive coverage as the sum insured is dedicated to you and the plan can also be customised as per your needs and preferences. The premium is calculated based on the individual’s age, medical history, gender, claim history, and other factors. You can buy separate health plans for yourself, your spouse, your children, and your parents.

While buying an individual health plan, choose an adequate sum insured to stay protected against unforeseen events and illnesses. Ensure the plan covers hospitalisation, pre and post-hospitalisation, ambulance cover, daycare procedures, domiciliary care, and alternative treatments and offers lifelong renewability.

What is a family health insurance plan?

When you want to cover your entire family under one plan, go for family health insurance. A single sum insured gets shared among all the insured members; hence, opting for a high sum insured is advisable. Any member can use it to cover the hospitalisation expenses in case of emergencies or planned treatments without denting the family’s savings. You have to pay a single premium which is based on the eldest member’s age.

While choosing health insurance plans for family, make sure the plan offers maximum coverage. You also need to consider the number of members to be included in the plan, their health conditions, and the sum insured.

Individual health plan vs family health plan

Both health insurance plans safeguard you against medical expenses, but they also differ from each other in many aspects, such as:

1. Coverage: This is the main difference. Individual health plans cover a single individual, whereas health insurance plans for families cover multiple household members under one plan.
2. Sum insured: In an individual plan, the sum insured is dedicated to a single person, so it can be customised as per his/her needs. In family health insurance, the sum insured gets shared by all members.
3. Premium: The premium of individual health insurance depends solely on the individual’s risk profile, whereas in a family plan, the premium is calculated based on the age and medical conditions of the eldest family member. If you include your parents in the plan, the age of your parents will be considered while calculating the premium.
4. Cost: Family plans are more cost-effective than buying several individual plans for each member.

Should you buy multiple individual plans or a family health plan?

This is entirely on the policyholder. However, if you are confused between the two, consider the following aspects:

1. Buying multiple individual health insurance plans means paying separate premiums for each plan. Now, this will turn out to be expensive when you compare it with a single premium of a family health plan.
2. When you cover your family members under one plan, it is easy to manage. Managing different plans can take much of your time, and there are chances of missing renewal deadlines, claiming NCB, keeping track of how much has been claimed, etc.
3. Individual health plans work well for bigger families with health conditions while family plan is ideal for couples and nuclear families where members are young with no major or minor health issues.
4. If any or some of the family members have diabetes, high blood pressure, or other pre-existing ailments, it is advisable to buy separate individual plans for them for maximum protection.
5. If your parents are senior citizens with chronic health issues, it makes sense to cover them separately instead of including them in a family plan. This way, the premium will be less because the cost is calculated based on the age and health risks of the eldest member.
6. One of the disadvantages of family health insurance is that the sum insured gets shared among all members. If one of the members exhausts the entire sum insured due to an emergency, the other members will be unprotected till the end of the policy term. If another emergency strikes, the insured has to bear the expenses. On the contrary, in an individual health plan, the sum insured is completely dedicated to that person.

So, both categories of plans have their pros and cons. Family health insurance can help you save on the premiums, but you must not forget that the sum insured is single and meant for all. This means you must opt for a high sum insured for maximum protection. Individual health plans provide adequate coverage, so they are expensive. Family floaters offer the best option for families with no chronic health issues. So, considering several factors, the person buying the health plan is the best judge.

Whether you buy multiple individual covers for your family or protect all of them under one policy depends on multiple factors, such as the number of members to be insured, the age of the eldest member, medical history, and current health status. Whichever you choose, you must ensure that each of them is adequately protected against medical emergencies and ailments. If you are unable to decide between the two plans, you can take the advice of an insurance expert or financial advisor.

Note: The above information is for illustrative purposes only. For more details, please refer to the policy wording and prospectus before concluding the sales.

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