A Safety Net For Your Kith & Kin

Wish to get health insurance for your parents, in-laws and other relatives? Do take a look at the new plans available in the market that provide economical options to cover your extended family, advises Jay Sampat.

KEY POINTS

• To tap the joint family system widespread in India, insurance companies have launched health insurance plans that cover one’s parents, in-laws and other members of the extended family.
• Conventional family floaters may not be an efficient option if you are covering your elderly parents, especially if they have a history of ailments, as their medical expenses could consume the entire amount, depriving the rest of the family of insurance cover. In such cases, you can consider these newer plans.
• Such plans work out to be cost-effective in the way they are structured. In comparison, insuring smaller family units separately works out to be a relatively expensive proposition even after factoring in the tax advantage that the families can enjoy individually.

These days, insurance companies are actively imposing caps, sub-limits, co-payment clauses and various other restrictions on corporate group health insurance policies, as such plans are unprofitable for the companies themselves. Given this scenario, many families face the risk of some of their members not having adequate insurance cover. Senior members of the family such as elderly parents and in-laws are at greater risk as they are more susceptible to health ailments.

One can address such a situation by buying individual health insurance cover for every member of the family or by buying a family floater plan. Individual health plans are a lot more expensive as compared to family floater plans. The drawback of family floaters, however, is that they restrict the coverage to two adults and two children, which means that the elderly parents are likely to be left out of the coverage.

To remedy this problem and tap the joint family system widespread in India, insurance companies have launched health insurance plans that will cover not only one’s parents, but also in-laws and close relatives. Such a plan has recently been launched by Aegon Religare, which has brought parents, in-laws and siblings under the policy coverage. Similarly, Oriental General Insurance's family floater allows the holders to include either their parents or parents-in-law in the plan.

Max Bupa too has a plan covering multiple relatives (Heartbeat Family First Policy). Under this policy, you need to choose separate limits for individual as well as floater covers. Individually, you can choose a sum between Rs 1 lakh and Rs 5 lakh. Under the floater option, you can choose between Rs 3 lakh and Rs 15 lakh. For instance, if you choose an individual cover of Rs 1 lakh and a family floater cover of Rs 9 lakh, for a family of 10 members then each member is entitled to an individual sum insured of Rs 1 lakh, whereas the Rs 9 lakh floater covers the entire family. So, any member covered can use up to Rs 9 lakh in a year, apart from the Rs 1 lakh earmarked for him/her in the individual cover. In the event that a member is hospitalised, the policy will first use the sum insured limit under the individual cover. In case the individual cover is insufficient, the policy will then dip into the floater cover chosen for the entire family.

The other distinctive features about this policy are that: 

1. It covers up to 13 relationships and there is no upper limit on the number of people it can cover.
2. In case the proposer dies during the policy year at the time of renewal (it is a one-year policy), the insurer will need a new proposer and the family relationships with the proposer will need to be changed.
3. For members above the age of 65 years, there is a co-payment of 20 per cent of the claim amount.
4. Maternity costs are covered after 24 months.

The Family First policy works out to be cost-effective in the way it is structured. Take the example of a family of 10 people, including grandparents, parents, in-laws, a couple and two children. For individual cover of Rs 3 lakh for each member and a floater of Rs 10 lakh, the premium works out to around Rs 2.5 lakh. Now, break the group into three families and pick up a combination of floater and individual policies. The sum insured for individual policies is Rs 3 lakh; for the floater policy, it is Rs 5 lakh for the couples and Rs 10 lakh for the family of four. The premium adds up to around Rs 4.3 lakh. Even after factoring in the tax advantage that the three families can enjoy individually by insuring the families separately, the combination works out to be a relatively expensive proposition.

By and large, if your family is healthy, family floaters are fine as the chances of all the members being hospitalised in a single year are low. Apart from ease of functioning and a lower outlay, these policies give your family a larger cover as compared to individual covers in case of an emergency.

However, the economics may not work out in favour of a conventional floater policy if you are covering your elderly parents under the plan, especially if they have a history of ailments. This is because if they are hospitalised, their medical expenses could consume the entire amount, depriving the rest of the family of insurance cover. Independent covers for each, on the other hand, may also be too expensive. In such cases, you can consider these newer plans if they suit your needs and the economics match. Also remember that only the member making the payment will be entitled for deductions under Section 80D.