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Family Floater Health Policy: Insure Your Parents Separately

High incidence of illnesses and ailments 

High costs of medical treatment 

High importance of health insurance policy

In this regards, one common dilemma faced by many people is whether (a) to insure each family member individually or (b) take a single insurance policy to cover the entire family. 

The right kind of policy depends on certain key factors such as age of the family members and their medical history.

In general, however, a single policy for all — known as a Family Floater Policy — is quite a convenient and economical option.

However, due to certain serious drawbacks (discussed below), it is best to have TWO separate family floater policies if parents too have to be insured. One policy will cover your spouse, children and yourself; while the second policy will cover your parents.

Let’s see why it makes sense to keep your parents separate from your own insurance.

1. Cost

This, of course, is the primary reason for two separate policies.

The premium in a family floater policy is determined, primarily by the age of the oldest member to be insured under the policy.

Higher the age, higher is the premium.

This is obvious. As a person ages, the probability of ailments and illnesses increases. Therefore, to cover for the higher claim ratio expected, insurance companies charge a higher premium for older persons.

Hence, it will be quite expensive, if elderly parents are included in a single policy.

Vis-à-vis this, the total premium of two separate policies will normally be significantly lower than the single policy.

So, from the cost perspective, it is prudent to insure parents through a separate family floater policy.

2. No Claim Bonus

As you are aware, if you don’t make any claim during the year, you become eligible for No Claim Bonus at the time of policy renewal.

The likelihood of claim in case of elderly parents will be high. Therefore, if you have a single policy, there are good chances that you will lose the benefit of no claim bonus.

As such, if there are two separate policies, you would at least be able to avail the no claim bonus on the policy that covers you, your spouse and kids.

Thus, apart from cost saving in the first year, two-policy strategy translates into extra savings in the coming years.

Wider and cheaper health cover is possible if parents are insured separately.

3. Rejection

Normally, insurance companies don’t insist on the medical check-up, if the eldest member is below 40.

Including the parents would mean that the medical check-up would become mandatory.

This has two risks.

One, the insurance company might reject your application. Thus, everyone in the family would remain uninsured.

Two, even if the insurance company agrees to issue the policy, it may be a “restrictive” policy with some special conditions and exclusions.

Separate policies will help avoid these risks.

4. Choice

Many policies specify the maximum age as 65 for issuing a policy to a new applicant.

Hence, if your parents are older than 65, your choice of policies is limited to only a few that insure persons of age 66 and above.

By going separate, you widen the choice of policies significantly. 

You can not only buy a much better cover for yourself, but also opt for specialized senior citizen policies for your parents.

5. Pre-existing illnesses

Health insurance policies come with a condition that pre-existing illness will not be covered during the first 2 to 4 years of the policyOnly after this minimum specified period for excluding the pre-existing illnesses, will you become eligible for insurance cover on such illnesses.

Since the chances of elderly parents suffering from some ailments are high, the standard family floater policy will not pay for such claims in the first 2-4 years.

Going for separate covers may help you to find more suitable policies, thereby achieving a better and wider coverage than a single policy.

Health insurance is a life-long requirement. Also, it is a long-term association between you and the insurance company. Therefore, make your choice(s) after thorough analysis and deliberation. There is no need to rush through in such matters.

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