Should you include parents in family health insurance policy?

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Are you looking for a family floater plan to ensure the health safety of your spouse, children, and parents all in one? You should think again. While health insurers may endorse a series of policies with add-on benefits for your parents, it’s not considered wise to add parents in a family health insurance policy. Why? For this, you must understand how a typical family floater plan works. While purchasing a health cover, two things must be kept in mind – the cost of healthcare and medical inflation.

“The entire sum insured floats among the covered family members in family floater plans. Any covered family member may use any amount up to the insured amount. For example, if you purchase a Rs 20 lakh family floater plan, any family member can use any amount up to the sum insured. A family in a metropolis should look into a policy with a sum assured of Rs 15-20 lakh,” said Amit Chhabra, head – health insurance at Policybazaar.com.

Premium will depend on the oldest member 

The cost of an insurance premium is directly proportional to the insured’s age. This means the premium of a family floater health insurance plan will depend on the age of the eldest member of your family. As a result, with a senior citizen as the senior-most member, standard family floater insurance will be more expensive. Therefore, it’s often advised to get insurance while you’re still young. It’s rather evident that you’ll be more fit at 25 than 50. Your health status at the time of buying the policy will largely determine the premium and sum assured. Let’s consider an example to understand this better.

Scenario 1 – You have a family floater plan with a sum assured of Rs 5 lakh. The insured persons include yourself (35 years), spouse (27 years) and your son (5 years) with no pre-existing illnesses. Suppose you bought the policy from Star Health. The premium would be Rs 1,308 monthly or Rs 15,688 annually.

Scenario 2 – Now, add your parents (father 65 years and mother 60 years) to the same policy. Since the oldest member in the plan is 65 years old, the premium payable for this policy will increase sharply. Here the premium would go up to Rs 2,788 monthly or Rs 33,453 annually. Besides, the policy will terminate as soon as the eldest member of the health cover reaches the maximum age covered by the policy.

Notably, Chhabra said, “The premium and sum assured in a family floater plan are both determined by the age of the oldest member of the family covered. It is advantageous if the family’s eldest member is between the ages of 26 to 40. Senior citizens should purchase a separate plan because senior citizen-specific plans are available in the market designed specifically to cater to their old-age needs.”

While buying an exclusive policy for parents might not affect total premium outgo but can have an impact on sum insured. For the same amount, one can avail higher sum insured.

What about pre-exiting diseases?

Senior citizens tend to have various pre-existing illness. Blood pressure and diabetes being the most common of all. It’s well established that if the policyholder has pre-existing illnesses, the premium for such plans will be higher as the risk of them falling sick is also greater. Thus, it makes no sense to add parents to your family floater plan and increase the overall premium. It will yield no good in the future and only broaden the limitations.

Will the coverage be sufficient for each family member?

When you include parents in a health insurance plan, the premium increases and sum assured invariably reduces. Now a policy of Rs 10 lakh might be sufficient for a family of 4 but accomodating parents to it will only reduce it’s effectiveness when needed. In case of multiple hospitalisations at a time or even in a single year, the sum assured may not be enough to cover everyone’s needs. This was quite evident during the pandemic when there were several instances of the entire family being diagnosed with the infection at once.

How to pick a plan for the elderly?

As we age, we become afflicted with a variety of illnesses and ailments that are costly to treat. Many companies provide health insurance for the elderly and senior citizens, which is specifically designed for those over the age of 55-60. These all-inclusive policies cover a wide range of conditions that affect the elderly.

“Select a policy that provides guaranteed coverage for a broad range of medical conditions and illnesses, including pre-existing conditions. Check to see if the policy has a short waiting period for pre-existing conditions. In the event of a medical emergency, it is preferable to have a network hospital with a cashless facility nearby. Always look for network hospitals in your area,” Chhabra asserted.

Having said that, if you still want to own a single health insurance policy for the entire family (including senior citizen parents), be prepared to pay a higher premium and increase the sum assured.