What is the Difference Between Individual and Family Health Insurance?

One of the initial questions to tackle when buying health insurance plans is whether one wants to go for an individual health insurance plan or a family health insurance policy. Every insurer offers these two variations of health insurance. Each policy comes with its advantages and disadvantages. However, before buying the health insurance policy, compare the differences between individual and family health insurance.

Some key differences between individual health insurance & family health insurance plans are as followings:

1. Who is covered?

The core difference between family plans and individual health insurance plans is that the former provides coverage for an entire family. Each member will be able to avail the benefits in case of any health emergencies.

An individual health insurance policy is taken in a single person’s name only. The dedicated Sum insured for an individual policy covers only the policyholder. If one wants family members to receive health insurance coverage, in this case, they will have to purchase additional individual health insurance policies. 

2. Sum Insured Provided

A family health insurance plan will cover the financial needs of an entire family under the sum insured defined in the policy. This complete coverage amount can be easily availed by any one or more members in the situation where medical aid is needed via finances.

As is the case with an individual health plan, the sum insured is not restricted to just a single person. Hence, the sum insured will continue to deplete when each member makes their own claim for medical assistance. Alternatively, when a claim is made by the policyholder for their individual health insurance plan, the sum insured of a family member with a separate individual health plan remains untouched.

3. Premium Mark-ups

The premium is the monthly or annual cost one pays toward their health insurance to preserve their sum insured in case of a medical emergency.

For a family health insurance plan, premiums are determined by looking at the age of the oldest family member that will be covered by it. In an individual health insurance policy, the premium is determined by looking at the age of the family member who is buying that policy for themselves.

In terms of cost per individual covered, family  health insurance plans are considered more affordable than individual health insurance plans, typically for a nuclear family. In cases where the eldest family member is a senior citizen, or suffering from pre-existing medical conditions, individual policies might be a better alternative.

Which Plan is Right for You: Individual or Family Health Insurance Plan?

A health insurance plan should be evaluated early in one’s financial planning journey by crosscomparing different health insurance plans. When it comes to which type of health insurance might suit you, the following situations are more preferable for one policy over another.

• Young individuals entering the workforce: Ideal candidates for individual health insurance as premium costs will be marked low by taking into consideration one’s age and lifestyle.
• Young families with children: The ideal candidates for a family plan. Normally, family floater plan covers four to five individuals (and more if needed). Your age will determine premium costs, but this is a simple way to keep your family protected against medical emergencies.
• Your parents: If your parents have reached retirement age, consider purchasing individual health insurance for them. You can benefit from the family health insurance plan’s low-cost option by purchasing a separate policy for your aging parents. Read more about how to protect your parents with health insurance here.

Conclusion:

However, keep in mind that irrespective of these scenarios, you should objectively consider the policy documents, exclusions, coverage, premium costs, payouts, and terms and conditions.