Family Health Insurance: A Take on Investing Early
Medical costs are on the rise, and personally paying for a treatment could blow a hole in your finances.
Individual health plans cover a large part of your medical expenses, but they’re available only to a single policyholder. Family health insurance plans, or family floater plans, on the other hand, can provide coverage to almost all your relatives.
Although most family policies only cover the health care expenses of your spouse and dependent children, you can find and customise a plan that provides coverage to your parents, in-laws, and even cousins.
Invest Early
It’s best that you invest in a scheme as soon as you start earning. Insurance companies provide larger coverage to those investing at a young age, and reduce the cover they provide as you get older. They do this because senior citizens are more susceptible to health problems, and their expenses tend to be higher.
Most people try to scout for the perfect plan, but there isn’t likely to be a policy with all the characteristics that you’re looking for. You may feel that the premium is too high or that the sum insured is inadequate, but remember that delaying an investment will reduce the opportunities you have.
The Benefits of Family Health Insurance
While a family health insurance plan may require you to pay a higher premium than an individual plans the former has many advantages.
Single Policy
The biggest advantage of family insurance is that a single policy allows you to cater to the healthcare needs of your entire family—you don’t have to purchase a plan for each individual member. Thanks to this, you won’t have a hard time trying to keep track of multiple investments.
One Premium
Instead of paying many premiums for numerous health insurance schemes, a single one is all you need to maintain a family insurance plan. This allows you to manage your yearly expenses and save a lot more than if you were to invest in several policies.
And if you invest early, your premium will most likely be a lot lower than at a later date.
Better Coverage
Medical expenses are skyrocketing, and mishaps can occur at any time. That’s why it’s better to invest in a family plan, which provides a larger cover than an individual one.
For example, Rohit has an individual plan for himself, his wife and his kids. The coverage for each policy is approximately INR 4 lakhs. After an accident, one of his children is hospitalised and the medical bills come up to INR 6 lakhs. Now Rohit will need to pay the additional two lakhs from his own finances.
If Rohit had taken a family plan, he would be getting a higher coverage, say INR 5 lakhs, while paying a lower overall premium. And not only is he saving a lakh on his child’s medical care, but he doesn’t need to pay premiums on multiple, individual schemes. All he has to do is pay for a single scheme, and his family is taken care of.
Tax Benefits
Under Section 80D of the Income Tax Act, the premium paid on family health insurance is subject to tax deductions under the following conditions:
- In case the medical insurance premium is paid to cover yourself, your spouse, and dependent children, a deduction of INR 25,000 is allowed. If you are a senior citizen, you can claim tax deduction on the premium of up to Rs 30,000.
- If you decide to insure your parents with the plan, you’ll get an additional deduction of INR 25,000. And if your parents happen to be senior citizens, the deduction can go up to INR 30,000.
The total deduction available is described in the table below.
| Description | For yourself, your spouse, and dependent children | For your parents | Total deduction under Sec. 80D |
| If no one has reached the age of 60. | INR 25,000 | INR 25,000 | INR 50,000 |
| If you and your family are below 60 years of age, and your parents are above 60. | INR 25,000 | INR 30,000 | INR 55,000 |
| If you and your parents are above the age of 60. | INR 30,0000 | INR 30,000 | INR 60,000 |
Remember to assess your needs before going in for an insurance plan. If you’ve got a large family to run, a family floater insurance would be your best option since buying several individual schemes would be an expensive affair.
But if one of your family members is above the age of 50, based on their health, you might want to consider getting an individual health plan as well. If they’re prone to falling sick more often, most of the sum insured would be spent on them, leaving very little for the rest of your family. This could be problematic in case of an emergency.
Read the documents carefully before committing your funds. Some companies state that they will only provide a portion of the total sum insured, and only on certain conditions. Pick an insurance scheme that will come in handy in your time of need, so that you can protect what’s most important to you.