Topic 1: How different is individual health insurance from family floater and critical illness plan?

A better way to avoid paying hospital bills from one’s own pocket is to make an insurance company pay for it. And, for that, you need to have a health insurance plan with enough coverage amount to meet the hospitalization expenses.

In a health insurance plan, depending on the coverage amount (sum insured) you want to keep, the premium has to be paid on an annual basis to the insurance company. At the time of hospitalization or at the occurrence of the insured event, the insurer pays the hospital and the policyholder need not worry about the medical bills.

What is equally important while purchasing a health insurance plan is to buy the right kind of policy that will keep the claim settlement process simpler.

A health insurance plan is advisable for all family members. But then, there are individual health insurance plan and a Family Floater plan and even the Critical Illness health insurance to choose from.

The most common form of health insurance plan is the individual health insurance plan popularly called the Mediclaim plans. They cover hospital bills if there is a minimum 24 hour of hospitalization, in addition to certain specific day-care treatment as well.

An individual health insurance plan is a must have for all for an amount that is depending on the city you reside in, the kind of hospitals in your area and especially what kind of hospitals you prefer. With rising medical costs, a coverage of Rs 5 to Rs 10 Lakh or even more is suggested. The actual premium will depend on the amount of coverage and your age.

And then, if you have a small family, buying a Family Floater plan could be an option that you may consider. In a Family Floater plan, all the family members can be covered under one plan, while the premium is decided on the amount of cover and the age of the eldest member. Overall, the premium outgo will be less. The only downside is that the coverage will be restrictive and will act as an umbrella cover for all members. As not all members are likely to fall ill in the same year, a Family Floater plan may be considered especially if there are kids in the family. Insurers do not allow Family Floater coverage when children age crosses 25 years.

So, between an individual health insurance plan and a Family Floater, how should one decide? “It is always better to take separate individual plans. This way you can ensure that the claims made by one individual does not impact the premiums for others. However, individual plans will be more expensive. Getting a family floater plan is the more economical option. You can get a large cover for the entire family and hope that not too many claims are made overall so that the cover is not exhausted.

Another key factor to consider while choosing between individual health insurance plan and Family Floater plan is your own and family’s medical history. If one of the persons in the family has a pre-existing health condition. In that case it is better to buy a separate insurance for that person tailored to their ailment and leave the family floater for the others.

After having purchased an individual health insurance plan or Family Floater plan, it’s time to get coverage for some serious illness. Certain critical illnesses may not require a longer hospitalization but there could be a bigger financial impact later on.

Here in comes the role of a critical illness plan, which unlike the individual health insurance plan (reimbursement plans) are defined benefit plans. So, in a critical illness plan, the sum insured that one keeps by paying the premium is entirely paid by the insurer on the occurrence of the specified critical illness, thus making it a defined benefit plan.

Should everyone then consider buying a critical illness plan and around what age and what amount it is best recommended. “This is a function of affordability. If you can afford to take a critical illness plan separately, you should take one with a large cover. Though a normal health insurance plan will cover the treatment for critical illnesses, most likely the cover amount will not suffice in case of treatment critical illnesses. A normal health plan is a must for covering most of your medical treatment costs. The critical illness plan will come handy in case of critical illness, where the treatment costs are much higher. Of course, with age the chances of critical illnesses are higher. But best to take the plan when you do not have any symptoms as it will be increasingly difficult as age increases and the normal age-related complications kick in.

And, here’s an important watch out while buying critical illness plans – Look for critical illness plans that pre-existing conditions should not be excluded permanently and there should be no survival period. Permanent exclusions should be avoided because ailments such as hypertension or diabetes can result in many critical illnesses such as heart attacks or strokes. You do not want even the remote possibility of these claims being denied in the future.
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