Larger family floater better than individual top-up plans

Published in Mint on 7 April, 2015, Written by Abhishek Bondia

If I take a family floater policy of Rs.20 lakh. How will it be divided among family members? What combination will be suitable—a family floater or individual covers along with top-ups? What should be the term for it?
—Ajit

A family floater is a shared sum assured among all family members. Each member of the family can utilize the full sum assured. Or, it could be shared in any proportion as per the insured’s need. However, the total sum assured utilization in a year cannot be more than the specified amount. An individual cover along with a top-up ensures that a certain sum assured is reserved for each family member. Thereafter the top-up floater could be used by any member of the family. The latter turns out to be slightly more expensive. You might be better off taking a higher family floater instead. The cost effectiveness varies for these structures by age. Health insurance is an annually renewable policy. With recent regulations, health policies have become lifelong renewable. So, you do not have to decide the term of the policy at the time of purchase. Most insurers will give a 5-10% discount if you pay two years premiums in one go.

I have a medical insurance coverage for my entire family of Rs.3 lakh from my employer. However, this will end as soon as I retire. Can I take a top-up policy in addition to my company insurance? If yes, let me know how.
—Tapas Chakraborty

Yes, you can take a top-up policy of any company over and above your company insurance. However, the benefits would vary depending on the type of top-up you choose. There are broadly two kinds of top-ups—group top-up, and standard individual top-up. In the group top-up plan, the benefits are customizable. Generally, pre-existing diseases are covered from the first day itself and all waiting periods are waived. Other benefits such as room rent, co-pay, other sub-limits are an exact replica of the base group plan. In a standard individual top-up plan, the benefits are same all across. A standard individual top-up plan works irrespective of the base group plan. While the group top-up plan typically needs to be bought from one insurer for all interested members, the individual top-up plan can be bought from any insurer by any member. Since you are close to retirement, you should consider a top-up plan that allows you to upgrade to a ground-up plan on policy anniversary. In such top-up plans, full medical underwriting is done at the time of purchase. Whenever the insured wants to upgrade, the deductible is waived and a ground-up plan is activated. The big advantage of such a plan is that duration spent in the top-up plan is considered for ground-up plan as well. So, assuming that your retirement is four years away, you will have all waiting periods waived by then.

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