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How Do Health Insurance Costs Get Affected by Family Size?

By Juhi Walia
04 October 2022, 11:48 AM

Family is always the most precious asset that we possess and it is our responsibility to take the best possible care of each of the members. Ensuring each family member’s health under a single health insurance cover is one of the most vital tasks and targets that we need to fulfil as early as possible. As per financial experts, buying a family floater health insurance plan is one of the wisest ways to ensure a healthy family, and maintain a healthy bank balance. 

What is Family Health Insurance?

A family health insurance plan is exclusively crafted to provide financial coverage against medical expenses for all the family members involved in the plan. This is an umbrella plan covering all the family members under a single roof. Each of these members is insured for the total sum insured and is eligible for the entire amount. However, the total sum gets divided among the family members in a particular year. 

The general design of these health plans is to cover the self, spouse, children, and parents. Certain plans even include grandparents, siblings, and in-laws too. Depending on the policy of the insurance company concerned, there are various kinds of family floater plans. 

Family Health Insurance: A Necessity, not a Luxury

There is no need to emphasize the skyrocketing medical costs, especially in recent times. Moreover, the type of medical care required changes with age. There cannot be any comparison between the medical care required by a newborn to that of a diabetic senior citizen. Therefore, such an alarming rise in medical inflation has become a major concern for most families. Maintaining an active health plan has become the only way out to safeguard such circumstances. It keeps you prepared for unprecedented health emergencies, safeguarding your financial position and combating medical inflation. 

Family Health Insurance Benefits

Some of the significant benefits of family health plans are:

  • Minimal Financial Stress: A large family with several members are prone to face more medical expenses frequently. Possessing a health plan helps you to cover such costs, including emergency hospitalizations too, without excessive financial stress. 
  • No Age Limit: One of the biggest advantages of a family health plan is that there is no age limit for the members involved in the policy plan. Starting from the first day of birth you can include a new member of any age. 
  • Easy Addition of New Family Members: Family floater plans are comparatively more flexible than other plans. Depending on the terms and conditions of the policy, you can easily add a new member under the plan coverage. 
  • Affordable Premium: When compared to individual plans, family floater plans are more affordable and cost-effective. Here, you don’t need to pay the premiums for each member individually, but a single premium payment covers all. 
  • Parents’ Coverage: Generally, family health plans normally cover 4-6 members. Different types of health insurance even extend to in-laws, siblings, etc. and can cover up to 16 members under one plan. 
  • Tax Benefits: Family floater plans offer tax benefits u/s 80D of the Income Tax Act. When the tax benefits of all the family members are combined, families are eligible to enjoy tax benefits of up to INR 1 lakh. However, it will be deducted from the taxable income. Therefore, the actual benefit can only be determined depending on the tax bracket the assessee belongs to. 

Factors to Consider While Buying a Family Health Plan

You need to consider certain crucial factors before purchasing a health plan for your family:

  • Policy Coverage: You need to consider the inclusions and exclusions of the plan concerned in detail before purchasing it. Certain important aspects to consider include ambulance charges, pre-and-post-hospitalization costs, maternity benefits, etc.
  • The Number of Family Members Covered: Certain health plans only cover the self, spouse, and children; while some others include extended members too. Depending on your requirement and the size of your family, you must carefully select the policy.
  • Room Rent Limit: Whether you will be treated in a private, a semi-private, or a shared room, during hospitalisation, depends on the terms of the policy. Try to invest in plans that offer higher room rent limits to save excess payments out of your pocket. 
  • Co-payment Clause: This determines the amount that you need to shed from your pocket, while the rest gets paid by the health insurance company concerned. 
  • The Waiting Period in Health Insurance for Pre-existing Conditions: Any medical condition diagnosed before buying the plan is considered a pre-existing illness. Almost all health insurance providers cover them after a stipulated tenure, called the waiting period. There remains an initial waiting period clause calculated from the policy purchase date. Depending on the type of plan, it varies between 30 days and 90 days. However, it does not apply to accidental circumstances. Pre-existing illness waiting periods normally vary between 2 and 4 years, depending on the plan purchased. Moreover, there are certain ailments like arthritis, kidney stones, etc. that do not get covered within the policy plan for initial 4 years, as per the policy terms. The waiting period for maternity benefits varies from company to company.


From the above discussion, we can understand the working strategy of family health insurance plans. Nowadays, it is very easy to buy online health insurance plans. However, you must compare health insurance plans of various companies to know the picture in detail and then proceed further depending on your requirement. Moreover, on the digital platform, you can easily avail health insurance premium calculator. This is especially helpful for effective and practical budget planning. So, without further delay, you can now start insuring your family’s health in the most efficient manner.

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1. How much health insurance is required for a family?

A practical thumb rule is to maintain coverage of around 50% of your annual average income. 

2. How much should I budget for health insurance?

Experts opine that maintaining a portfolio of 10% of the annual income is sufficient for maintaining a standard family health plan. However, a lot of factors must be considered while making the plan including your age, health status, income, eligibility restrictions and many more. 

3. What are the major determining factors that are considered while buying a health plan?

Some of the most crucial factors that are taken into account while buying health plans include:

  • Age
  • Past medical history
  • Occupation
  • Policy tenure
  • BMI
  • Smoking habits
  • Geographical location
  • Chosen plan type 
  • Coinsurance feature

4. Who can be covered under a family health insurance plan?

Under an average floater plan, you can include yourself along with your legally married spouse, dependent children, in-laws, or parents, depending on the choice of the plan.

5. How does a health plan work for a family?

Family floater plans are health plans that cover an entire family. Regardless of the age, you need not have to pay single premiums for every individual family member. All of them get covered under a single plan.

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