Health insurance & family floater

Why a personal policy matters even when you have corporate cover

Group health cover from an employer is valuable and it is not yours. It ends the day the job does, usually for your family too, and the sum insured is set by your employer rather than by your needs.

The risk that follows is specific. Someone who has relied only on corporate cover for fifteen years, then changes jobs or retires at forty-eight having acquired a condition along the way, now faces retail underwriting at the worst possible moment — with waiting periods starting from zero and the condition treated as pre-existing.

A personal policy, held alongside the corporate one from early on, solves this. It need not be large. What it accumulates is continuity: waiting periods served, no-claim bonus built, and an insurer relationship that predates any health problem.

The features that actually determine what you get paid

Room rent capping. The most consequential clause in most policies and the least understood. If the cover caps the room at a stated amount or percentage and you take a costlier room, many wordings apply a proportionate deduction across the whole bill — surgeon fees, investigations, consumables — because hospital tariffs scale with room category. Prefer a policy with no room rent cap, or understand precisely what yours does.

Waiting periods. There is an initial period from inception, a longer one for listed ailments, and a defined period before pre-existing conditions are covered. IRDAI reduced the maximum pre-existing disease waiting period in its 2024 health insurance framework, and also shortened the moratorium after which a policy generally cannot be contested except for fraud. Check the specific periods in your wording — they vary between products.

Sub-limits and co-pay. Caps on specific procedures, and a share of each claim borne by you. Both reduce premium and both reduce what you receive.

Restoration. Reinstates the sum insured if it is exhausted during the year. On a family floater this matters a great deal, since one member’s serious illness can otherwise leave everyone else uncovered.

No-claim bonus. Increases the sum insured for each claim-free year, often substantially over time, at no extra premium.

How much cover, and floater or individual

Sum insured decisions are usually made by reference to premium rather than to hospital bills, which is the wrong way round. A single serious episode in a private hospital in a metro can consume far more than the cover most families hold. Where a large sum insured is unaffordable directly, a base policy combined with a super top-up is usually far cheaper than the same total cover bought outright, because the top-up only responds above a deductible.

On structure: a floater is cheaper and works well for a young family. Its weakness is that one large claim can consume the shared cover. Individual policies cost more and remove that risk. Where parents are involved, a separate policy for them is often better than adding them to a family floater, because their age drives the pricing of the whole floater upward.

Recent changes worth knowing

• GST. Individual and family floater health policies bought by individuals were exempted from GST with effect from 22 September 2025. Group and corporate policies remain at 18% — see group health insurance.
• Age limits. IRDAI removed the maximum entry age restriction on health insurance products, widening availability for older buyers.
• Cashless. The industry has moved towards cashless settlement as the norm rather than the exception, including at non-network hospitals under certain arrangements.
• Moratorium. After a defined period of continuous cover, a policy generally cannot be contested except on grounds of established fraud — another argument for starting early and maintaining continuity.

Portability, and the tax position

You can port a policy to another insurer at renewal while carrying forward the waiting periods already served and, generally, the accrued no-claim bonus. Apply well before renewal, because the process takes time and a lapse can cost you the continuity you are trying to preserve. Never let a policy lapse while arranging a replacement.

Premium qualifies for deduction under Section 80D, with separate limits for yourself and family and for parents, and enhanced limits where the insured is a senior citizen. The deduction is available under the old regime. Confirm the current limits and your eligibility with your chartered accountant.

How Rytvae helps

We size cover against what treatment actually costs rather than against a premium budget, read the room rent and sub-limit clauses before recommending anything, and structure base-plus-super-top-up where that gives better cover for the money. Insurance is placed through our IRDAI-regulated partners. See also term insurance and retirement planning, where health cover after employment is a central issue.

Frequently asked questions