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What Is Floater Policy In Health Insurance?

by gongshang23

Health insurance is a crucial financial safeguard, shielding individuals and families from the potentially staggering costs of medical care. Among the various health insurance options available, the floater policy stands out as a popular and flexible choice. This article aims to provide a comprehensive understanding of floater policies in health insurance, covering everything from their basic definition and working mechanism to different types, benefits, drawbacks, and how to select the right one.

Understanding the Basics of Floater Policy

Definition

A floater policy in health insurance, also known as a family floater policy, is a type of health insurance plan that provides coverage to multiple members of a family under a single policy. Instead of having separate policies for each family member, a single sum insured is allocated to the entire family. This sum insured can be utilized by any family member, or shared among them, in case of medical emergencies.

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For example, consider a family of four – a husband, wife, and two children. They opt for a family floater policy with a sum insured of $100,000. If the wife falls ill and requires hospitalization, the medical expenses up to the sum insured can be claimed. In case another family member gets sick later in the policy period, the remaining sum insured can be used for their treatment.

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Key Features

Shared Sum Insured: The most prominent feature of a floater policy is the shared sum insured. This means that the total amount of coverage is not divided among family members. Instead, it is a pool of funds that can be accessed by any covered individual.

Covers Multiple Family Members: Typically, floater policies cover immediate family members such as spouses, children, and sometimes parents. Some insurers may also allow coverage for in – laws.

Single Premium: A single premium is paid for the entire family. This is often more cost – effective than purchasing individual policies for each family member.

How Does a Floater Policy Work?

Policy Activation

Once a family purchases a floater policy, the policy comes into effect after the payment of the premium. During the policy period, which is usually one year, any family member covered under the policy can make a claim.

Making a Claim

When a family member requires medical treatment, the insured needs to inform the insurance company. The claim can be either cashless or reimbursement – based. In a cashless claim, the insured visits a network hospital, and the insurance company settles the bill directly with the hospital. In a reimbursement – based claim, the insured pays the medical expenses upfront and then submits the bills to the insurance company for reimbursement.

For instance, if a child in the family needs surgery, the parents can inform the insurance company. If the hospital is a network hospital, the insurance company will cover the eligible expenses directly. If not, the parents will have to pay the bills first and then file a claim for reimbursement.

Adjusting the Sum Insured

As claims are made during the policy period, the sum insured is reduced by the amount of the claim. However, if the sum insured is not fully utilized, the remaining amount can be used for future claims by other family members.

Different Types of Floater Policies

Standard Family Floater Policy

This is the most common type of floater policy. It covers a family unit, including spouses, children, and in some cases, parents. The sum insured is shared among all the covered members, and the policy provides coverage for hospitalization expenses, pre – and post – hospitalization expenses, and sometimes daycare procedures.

Super Top – Up Floater Policy

A super top – up floater policy is an add – on to an existing health insurance policy. It provides additional coverage over and above the base policy’s sum insured. For example, if a family has a basic floater policy with a sum insured of \(50,000 and purchases a super top – up floater policy with a deductible of \)10,000 and a sum insured of \(100,000, the super top – up policy will kick in when the total medical expenses exceed \)10,000.

Family Floater with Restoration Benefit

Some floater policies come with a restoration benefit. If the sum insured is exhausted during the policy period due to a claim, the policy may be restored to its original sum insured. This is particularly useful in case of multiple medical emergencies within a single policy year.

Benefits of Floater Policies

Cost – Efficiency

One of the major advantages of floater policies is cost – efficiency. Since a single premium is paid for multiple family members, it is often more affordable than buying individual policies. For example, the premium for a family floater policy for a family of four may be significantly lower than the combined premiums of four individual policies.

Flexibility

Floater policies offer great flexibility in terms of claim settlement. The sum insured can be used by any family member, allowing for better management of medical expenses. This is especially beneficial when multiple family members require medical treatment during the same policy period.

Comprehensive Coverage

Most floater policies provide comprehensive coverage, including hospitalization, pre – and post – hospitalization expenses, and daycare procedures. Some policies may also cover alternative treatments such as Ayurveda, Yoga, Naturopathy, Unani, Siddha, and Homeopathy (AYUSH).

Drawbacks of Floater Policies

High Premiums for Older Family Members

As the age of family members increases, the premium for a floater policy also goes up. This is because older individuals are more likely to require medical treatment, and the insurance company bears a higher risk.

Risk of Depletion of Sum Insured

If a family member has a serious illness and requires extensive medical treatment, the sum insured may be exhausted quickly. This can leave other family members with limited coverage in case they need medical treatment later in the policy period.

Choosing the Right Floater Policy

Assess Your Family’s Medical Needs

Before purchasing a floater policy, it is important to assess your family’s medical needs. Consider the age, health condition, and lifestyle of each family member. If there are elderly members or individuals with pre – existing conditions, you may need a higher sum insured.

Compare Different Policies

Shop around and compare different floater policies from various insurance companies. Look at the sum insured, premium, coverage details, claim settlement ratio, and customer reviews. This will help you find the best policy that suits your family’s needs and budget.

Understand the Exclusions

Read the policy document carefully and understand the exclusions. Some policies may not cover certain pre – existing conditions, self – inflicted injuries, or cosmetic surgeries. Make sure you are aware of what is not covered to avoid any surprises when making a claim.

Case Studies

Case 1: The Smith Family

The Smith family, consisting of a husband, wife, and two children, purchased a family floater policy with a sum insured of \(80,000. During the policy period, the wife was diagnosed with a serious illness and required hospitalization. The medical expenses amounted to \)60,000. Since the family had a floater policy, the insurance company covered the entire expense. Later in the year, one of the children had an accident and needed treatment. The remaining sum insured of $20,000 was used to cover the child’s medical expenses.

Case 2: The Johnson Family

The Johnson family had a super top – up floater policy in addition to their basic floater policy. The basic policy had a sum insured of \(30,000, and the super top – up policy had a deductible of \)5,000 and a sum insured of \(50,000. When the father had a major surgery, the medical expenses were \)40,000. The basic policy covered \(30,000, and the super top – up policy covered the remaining \)5,000 (after deducting the deductible).

Future Trends in Floater Policies

As the healthcare industry evolves, floater policies are also likely to undergo changes. Insurance companies may introduce more innovative features such as coverage for telemedicine, mental health services, and personalized healthcare plans. Additionally, with the increasing use of technology, the claim settlement process is expected to become more streamlined and efficient.

Conclusion

Floater policies in health insurance offer a convenient and cost – effective way to provide coverage to multiple family members. By understanding the basics, benefits, drawbacks, and how to choose the right policy, families can make informed decisions and ensure financial security in the face of medical emergencies. As the demand for comprehensive healthcare coverage continues to grow, floater policies are likely to play an even more important role in the health insurance landscape.

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