Pros and cons of group insurance family floater options
Groups often offer health insurance cover to their members. For employers, this is a useful incentive to hire and retain employees. It involves the employer buying a group mediclaim insurance policy that will cover its employees.
In some cases, the employer might also decide to extend coverage to the family of its employees. This might take the form of a family floater sum assured.
Advantages of family floater sum assured
A family floater sum assured means health insurance coverage is available to the family members of the employee as well as the employee. The total sum insured would be divided between all the covered family members. The insurer will provide the benefits of group medical insurance up to the sum insured, subject to any limits as stated in the policy document. Insurance companies also offer maternity benefits under a group insurance family floater plan.
Disadvantages of family floater sum assured
Extending coverage to family members does not imply an increase in sum insured. So, the insurance provides coverage for the employee and their family members only up to the sum insured. The total sum insured will reduce depending on use. This means that if any family member makes use of the group health insurance policy, the insurer will reduce the available sum insured to that extent. If the employee or a family member exhaust the entire sum insured, then the rest of the family will have no cover.
Case study: How group insurance family floater plans work
Software engineer Rajiv Saran works with MJ Tech and lives in Delhi with his wife and father. MJ Tech offers its employees group health insurance coverage of up to Rs 5 lakh. The company offers the policy not only to employees but to their family members as well.
Last year, Rajiv’s father had to be hospitalised after a cardiac arrest. Rajiv decided to use the group mediclaim insurance to pay his father’s hospital bills. Rajiv’s father’s medical bills totalled Rs 6 lakh. However, Rajiv had taken his father to a non-network hospital. So, when Rajiv filed the claim under group health insurance, the insurer asked him to pay the medical bills first.
The medical bill was Rs 6 lakh and the cover was Rs 5 lakh. So, the insurer settled the claim only up to the sum insured, and Rajiv paid the remaining Rs 1 lakh. However, this claim used up the entire sum insured.
Some days later, Rajiv was hit by a car. Passers-by took him to a hospital, where doctors operated on him and saved his life. His medical bills came to around Rs 2 lakh. When Rajiv approached his group health insurance company to settle the claim, they refused. They explained that his father’s hospitalisation had used up the entire sum insured.
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