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Family Floater vs Individual Cover — Which Is Better?

The floater looks cheaper. It often is not. Here is when each makes sense.

A family floater policy seems like an obvious choice — one policy for the whole family at a lower total premium. But the floater has a critical structural weakness.

The Floater Trap

One Claim Can Exhaust Cover for Everyone

Under a floater policy, the sum insured is shared across all family members. If your parents have a major hospitalisation and exhaust the Rs 10 lakh cover, your children have zero cover for the rest of the policy year. Premium is also calculated based on the eldest member's age.

Critical insight: A floater including a 65-year-old parent is priced as if everyone is 65 years old — often more expensive than individual policies for younger members.
When Floater Makes Sense

Younger Nuclear Families

A floater works well for a young couple with children under 18 where all members are healthy and the probability of simultaneous hospitalisation is low. For a family of 4 in a metro, adequate means at least Rs 25-30 lakh sum insured.

Restore benefit: If your floater has a restore benefit, the risk of exhaustion is partially mitigated — but only if the restore conditions are met.
When Individual Is Better

Mixed-Age Families and Senior Parents

If you are covering parents above 55-60, individual policies are almost always better. Each member gets their own dedicated sum insured that cannot be depleted by another member's claim. Individual policies can also be ported independently.

Best structure: Individual policies for parents and a separate floater for the nuclear family unit. This separates the high-risk elderly cover from the lower-risk young family cover.

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