Save on Health Cover Cost with a Floater Plan

Kirti Shah, 36, was shopping for a health insurance cover for his family of three. He was surprised when his insurance advisor gave him two quotes: one was the total cost of individual covers for the three and the other a family floater policy, covering all of them — him, his wife and his six-year-old son. Kirti didn't know the difference between an individual plan and a floater policy. The advisor said the premium for a family floater plan with a sum assured of Rs 3 lakh would be Rs 7,753 (excluding taxes), while the total cost for individual covers would workout to be Rs 12,166 for a cover of Rs 3 lakh each. Needless to say, Kirti is now confused.

The pros and cons

To begin with, one should understand the difference between an individual cover and a family floater plan. An individual plan covers only the policyholder, where as a family floater covers the entire family, usually comprising self, spouse and two dependent children. There is usually a family discount of up to 10% on the total premium when the husband, wife, dependent children and/or dependent parents are covered under the same policy. "Since the insurance company is aggregating risks, the premium is lower," explains Sanjay Dutta, head — customer service, health & motor, ICICI Lombard General Insurance Company.

The other advantage of a floater plan is the flexibility that comes with it. Any family member can lodge multiple claims, totalling Rs 3 lakh, the sum assured, in a year. So, any member of Kirti Shah's family can claim up to Rs 3 lakh. But in an individual cover, only the individual who has taken the policy can make a claim and that too for the amount he/ she is covered for.

A family floater policy is also easier to manage than an individual plan. "While renewing, you just need to remember a single date, instead of three or four dates in the case of individual plans," says Anup Bhaiya, MD & CEO of Money Honey Financial Services.

Also, in a floater, it is easy to add a new family member. But, with individual cover, a fresh policy needs to be taken every time there is an addition to the family. In case of the unfortunate demise of the senior-most member of the family, other members of the family can continue with the floater without losing any benefits. "The surviving members can continue to hold the cover as per the policy terms in the case of the death of the eldest member. The policy can be renewed again with the next eldest member becoming the primary member and the policy continuity benefits can be availed of as per the terms and condition of the plan," says Antony Jacob, chief executive officer, Apollo Munich Health Insurance.

"However, a floater policy carries a rare risk," says Sanjay Datta. If a family has a floater plan for a sum assured of say Rs 2 lakh, and if the entire family suffers medical emergencies in an accident, for instance, then in such a case the cover would be inadequate for the family, as each of them may require Rs 2lakhfortreatment.The individual will then have to shell out money from his/her pocket for treatment. In such a scenario, an individual cover will score better . If there is a medical cost of Rs 2 lakh on each individual due to an accident, each of them can claim Rs 2 lakh, provided they are insured for that amount, and they will not have to shell out from their pockets.

Taking a call

Most of us are diligent while buying health insurance covers. On the face of it, a floater policy does come with the cost benefit when compared with individual policies, but then that should not be the only deciding factor while choosing a plan. You need to consider several other factors, too, to figure out which will suit you better. Age would be one of the important parameters to look at. In a floater policy, the cost is governed by the age of the senior-most member of the family to be covered, says Jacob. So it makes sense for a young family to opt for a floater plan. Also if your parents are above 60, then it is likely that they could have higher claims. Hence, they would be better off with individual plans.

If you are covered by your employer , experts recommend that you buy your own family floater also, to add to the one offered by your employer, as it helps take care of interim periods between job switches. "Although you are covered by a floater offered by your company, an additional floater cover is advisable as it would offer coverage to your whole family even if you leave the job or retire ," says Jacob. Also floaters help you get additional cover. So, suppose the organisation you work for covers you for Rs 2 lakh. But if you feel you need a cover of at least Rs 4 lakh, you can opt for a floater of another Rs 2 lakh.

"If the earning member is covered by the employer and does not want to pay double premium, he could opt for a floater," says Gaurav Garg, MD and CEO, Tata AIG Life Insurance. Some financial planners recommend having an individual cover first and adding a floater to that. "As people get afflicted with medical issues separately and at various ages, it is always better to have a primary cover first," says Vishal Dhawan, founder, Plan Ahead Wealth Advisors . If you wish to have higher medical insurance as your age increases, you can take a floater plan, he says.

Jump in Travel Insurance Sales as Holiday Season Takes Off

As many Indians pack their bags and head beyond the boundaries for a vacation, insurers are witnessing a 30-40 per cent jump in travel insurance policy sales during the summer season.

The May-June months traditionally see an increase in travel and tourism activities as most families and students plan their vacation during this period. This is because schools and colleges are closed for summer vacation and many of them look to escape the hot weather in the subcontinent.

Though North America and South-East Asia have been traditionally popular with domestic tourists, Europe has also received a lot of interest this time around, Mr Gaurav Garg, Managing Director and Chief Executive Officer, Tata AIG General Insurance, told Business Line.

“Europe is more expensive than Asian or American destination. However, with awareness increasing, Indians getting richer and travel companies offering better packages, we have seen an increase in the popularity of European destinations,” he said.

He added that the take-up rate of policies, the highest in May, has gone up by 30-40 per cent. Over the same period last year, the increase was around 25 per cent.

Apollo Munich Health Insurance said that the April to June period accounts for 40 per cent of its total travel insurance business for the whole year.

“Over the last few years we have witnessed a rise in the volume of travel insurance business during the summers, which eventually peak between the months of April and June. In the last couple of years, the maximum policies were sold for worldwide option where the US and Canada are also included,” said Mr Antony Jacob, CEO, Apollo Munich Health.

Travel insurance premiums are also the highest for North America, as medical costs in the US are higher than most other regions. Companies usually bracket North America into a different premium slab from the rest of the world.

“The cost of treatment, even for a medical emergency in the US is very high in comparison to Asian countries. The premium rate for travel insurance, for a trip by an individual to the US or Canada, is approximately 20-25 per cent higher than that of a trip to West Asia ,” said Mr Jacob.

The exact premium, however, is calculated based on the age of the traveller, sum insured, trip duration, type of travel (annual multi-trip or single travel), besides the region.

Antony Jacob Looking Forward to cover 500 Million Population

Indian Health Insurance industry stands at INR 5,125 crores with only a small section of the total population (around 2%) being covered so far. Indian Health Insurance industry aims to cover 500 Million population over the next five years. Is this realistic? What is the way forward for Apollo Munich?














Let me first start with the overall health insurance scenario market in India. In my opinion there is no other industry in India or around the world which I know of, which has been growing at about 25-30% per annum and has the potential to grow for the next 5 years, in my opinion, at 20-25%. But I must admit that this growth has been on a small base. For example just 30 million people have health insurance policy in this country. If you set aside the railways and the ESIs and other government schemes, which is about 30%, the final percentage hovers around 3% and this number is pathetically low. Now I think that the specific 500 million target is a very good target to keep in mind and it’s a very good goal for the industry to work towards but the question is when is it reachable?

I am firm believer that everything is possible in this world as long as there is a clear plan with a clear roadmap. Now specifically on 500 mn in 5 years I think it hugely depends not on the coverage of people in metros and tier-1 and tier 2 cities, it actually depends on how much and how quickly we can cover the masses of India. The Ministry of Labour has made an excellent beginning in this regard with a scheme called RSBY (www.rsby.in) and this is covering the population below the poverty line. I think this scheme is now available as a policy in almost every State except in those states which have their own schemes example- Andhra Pradesh and Tamil Nadu. Now that is a great scheme, as I have seen and as we have participated in the State of Meghalaya. We had won the tender for the state of Meghalaya and we are currently insuring people below the poverty line in our own way. We started our enrollment in Meghalaya in late December and we hope to cover about one million of people between January and March 2010. We hope to cover around 200 thousand families, with an average family of about 5 per family. This scheme which has public and private sector companies participating in it, including Apollo Munich, is an excellent scheme where the coverage is right and the principle under which it operates is correct. We are hoping and we are confident that Apollo Munich would do an outstanding job on this and hopefully next year this time we will have the statistics to show how well we have done this assignment. So if every company participating in these schemes has the same aims and objectives, I think we will reach beyond 500 Million.

Now at the same time we also need to make sure that in the other segment i.e. people above poverty line also do not fall behind. In this sector too there is a huge under-penetration, as only a small percentage of insurance is secured. Therefore this segment also needs to grow at the same time for which public and private sector along with the regulator and the Government will first need to raise the level of awareness of people. They should know why health insurance is needed and what its benefits are. And each company will have to do its own marketing like you would have seen very recently Apollo Munich has started a very big campaign and we have committed continuing it for the next 5 to 10 years. So we believe that additional awareness, creating through companies like Apollo Munich will also raise the awareness and also increase the penetration in tier-1 and tier 2 cities and people above poverty line.

Do you think the development of health insurance market products must be kept simple, so that people do not get confused in sub limits?

Health insurance products have been sold and perceived as compli­cated products, when in fact they don't need to be. We have started to take the lead in uncomplicating health insurance so that more and more people can be comfortable using it to protect themselves from the growing health care costs while getting access to the best quality health care. We have no disease-specific sub limits in our plans, and we offer lifelong renewal with no restrictions with respect to age or any specific disease. This is one way in which we are uncomplicating health insurance.

What led to Apollo DKV being re­launched as Apollo Munich?

There is no change in partnership but only a name change as Munich Health is the new brand under which Munich Re is now offering its health care sector services. Munich Re is thus bringing together under one banner its global insurance and reinsurance know-how in health. We also went in for a change of our brand name. We feel with the name change it is easier for customers to identify with.

Could you elaborate on the new campaign 'let's uncomplicate'?

'Let's uncomplicate' is our belief and our journey. Health insurance is not yet seen as the ideal vehicle to finance health care expenditure. Our campaign showcases Apollo Munich as a straightforward, user-friendly and hassle-free health insurance company. As the campaign stated, Apollo Munich will take the fear out of faces, the jargon out of words, the bitter out of the medicine and the trouble out of the treatment to uncomplicate health care and, more specifically, health insurance.

How do you see the first decade of liberalization of Indian insurance industry?

The insurance sector in India has come a full circle from being an open competitive market to nationalisation and back to a liberalised market again. Tracing the developments in the Indian insurance sector reveals the 360 degree turn witnessed over a period of almost two centuries. Although there has been rapid growth of the sector over the last decade, insurance in India still remains at an early stage of development. Insurance is one sector whose contribution to the GDP has been quite significant. During the last three decades, insurance penetration as a percentage of the gross domestic product has more than doubled from around 3.5 per cent in 1970. The insurance sector thus has grown more strongly than the overall economy.

What according you are some of the most important developments and also the disappointing factors during the last decade?

The biggest development in this industry was the opening up of the industry following the 1999 IRDA regulation. Also with the proliferation of bancassurance, it is rapidly changing the way insurance products are distributed in India. This will also have strong implications on the process of financial convergence and capital market development in India. On the regulatory side, there are outstanding concerns regarding certain taxation and accounting issues, caps on foreign equity shareholdings, as well as the enforcement of price tariffs in the non-life insurance sector. Health insurance is still underdeveloped in India but offers huge potential, as there will be increasing needs to purchase private health cover to supplement public programmes. Similarly the deficiencies in the current pension schemes should offer significant opportunities to private providers. With the majority of the population still residing in rural areas, the development of rural insurance will be critical in driving overall insurance market development over the longer term.