Nalini and Mahesh Gokhale (an illustrative profile) live in Pune with their two school-going children. Mahesh's employer gives the family ₹5 lakh of group cover. Nalini's parents, both 70, have no policy at all. When Mahesh's father was hospitalised last year, the ₹3.2 lakh bill came from the couple's savings, and they discovered they could not add him to the group plan.
Their questions are common ones. How much cover is enough? Should the family share one policy? And why do claims so often pay less than the bill? This chapter answers each, with the arithmetic.
In this chapter
- Why employer cover is not enough, and how much cover makes sense
- Individual policies versus family floaters
- How a super top-up works, and why it beats a plain top-up
- The clauses that decide your claim, including IRDAI's 2024 changes
Why employer cover is not enough
Medical costs in India rise much faster than general prices: Aon projected India's medical cost trend at 11.5% for 2026, about double the planning assumption for general inflation. At that pace, a ₹5 lakh treatment today would cost nearly ₹15 lakh in ten years. Cover that looks generous now can look thin very quickly.
Group cover is valuable, but it ends when you resign, retire or are laid off. A personal policy bought while you are healthy builds continuity: its waiting periods run out in the background, so they are over by the time you need them. Read more in our guide to health insurance for corporate employees.
Individual or family floater?
A sum insured is the maximum the policy pays in a policy year. With a family floater, one sum insured is shared by everyone covered. With individual policies, each person has their own. Floaters are cheaper for young families because the chance of several large claims in one year is low.
| Feature | Individual policy | Family floater |
|---|---|---|
| How the sum insured works | Each person has their own limit | One limit shared by all members |
| Cost | Higher overall | Lower for young families |
| Risk | One person's claim does not affect others | One large claim can exhaust cover for everyone that year |
| Premium basis | Each member's age | Usually the eldest member's age |
| Suits | Older parents, members with health conditions | Young couples and children |
Adding 70-year-old parents to a floater usually raises the premium sharply, because it is priced on the eldest member, and their claims can use up the children's cover. Separate policies for parents are generally cleaner.
Base policy plus super top-up
A deductible is the amount of bills you (or another policy) must cover before an insurer starts paying. A top-up pays when a single claim exceeds the deductible. A super top-up pays when the total of all claims in the policy year exceeds it. Paired with a base policy whose sum insured equals the deductible, a super top-up gives high cover for much less than a single large policy.
Worked example 1: two hospital stays in one year
Assumptions, illustrative: a ₹10 lakh base floater, plus either a top-up or a super top-up of ₹40 lakh with a ₹10 lakh deductible. The family has two admissions in one year, costing ₹6 lakh and ₹9 lakh.
- Total bills: ₹6 lakh + ₹9 lakh = ₹15 lakh.
- Base policy: pays the first claim in full (₹6 lakh), leaving ₹4 lakh of sum insured, so it pays ₹4 lakh of the second claim. ₹5 lakh remains unpaid.
- With a plain top-up: neither claim on its own exceeds ₹10 lakh, so the top-up pays nothing. The family pays ₹5 lakh.
- With a super top-up: total bills of ₹15 lakh exceed the ₹10 lakh deductible by ₹5 lakh, so it pays ₹5 lakh. The family pays nothing (apart from non-payable items).
| Base only | Base + top-up | Base + super top-up | |
|---|---|---|---|
| Paid by base policy | ₹10 lakh | ₹10 lakh | ₹10 lakh |
| Paid by second policy | Nil | Nil | ₹5 lakh |
| Paid by family | ₹5 lakh | ₹5 lakh | Nil |
The fine print that decides your claim
- Room rent cap: a limit on the daily room charge, often a percentage of the sum insured. If you choose a costlier room, many linked charges, such as doctor visits and procedures, can be cut in the same proportion.
- Co-pay: a fixed share of every claim you pay yourself, say 10% or 20%. Common in senior citizen policies; it lowers the premium but raises your cost at claim time.
- Sub-limits: caps on specific treatments such as cataract surgery or joint replacement.
- Waiting periods: an initial wait (commonly 30 days, except accidents), a longer wait for listed illnesses, and a wait for pre-existing diseases (PED), which are conditions you already had when you bought the policy.
Worked example 2: the room rent trap
Assumptions, illustrative: ₹5 lakh sum insured with room rent capped at 1% (₹5,000 a day). The patient chooses an ₹8,000 room for 4 days. The bill is ₹3 lakh: room ₹32,000, linked charges ₹2 lakh, and medicines and consumables ₹68,000 (assumed not subject to the proportion).
- Proportion allowed: ₹5,000 ÷ ₹8,000 = 62.5%.
- Room paid: ₹32,000 × 62.5% = ₹20,000.
- Linked charges paid: ₹2 lakh × 62.5% = ₹1.25 lakh.
- Medicines paid in full: ₹68,000.
- Total paid: ₹2.13 lakh. The family pays ₹87,000, although the room difference was only ₹12,000.
What IRDAI changed in 2024
| Rule | Before | From 2024 |
|---|---|---|
| Upper age limit to buy a policy | Typically 65 | No upper age limit |
| Maximum pre-existing disease waiting period | Up to 4 years | Up to 3 years |
| Moratorium (after which non-disclosure cannot be used to reject a claim, except fraud) | 8 years | 5 years |
The moratorium rewards buying early and renewing without a break, including when you port to another insurer. Also, since 22 September 2025, individual health insurance premiums are exempt from GST. Premiums can still qualify for a deduction under the old tax regime.
Common mistakes to avoid
- Relying only on group cover: it ends with the job and cannot always include parents.
- Accepting a room rent cap to save premium: one claim can cost more than years of savings.
- Putting elderly parents on the family floater: it raises the premium and shares a limit with the children.
- Letting a policy lapse: a break restarts waiting periods and the moratorium clock.
- Not disclosing a condition: within the first five years, it is the commonest ground for rejection.
Try this yourself: Open your current health policy document and find four things: sum insured, room rent limit, co-pay and the pre-existing disease waiting period. Then check whether every family member, including parents, has cover that does not depend on an employer. If any answer is unclear, the free insurance check-up can read the policy with you.
Frequently asked questions
How much health cover does a family in a metro need?
There is no single number, but with medical inflation near 11.5%, many families find a base of ₹10 lakh plus a super top-up taking total cover to ₹25 lakh to ₹50 lakh a sensible range. Check what major procedures cost at hospitals near you, and remember cover must last for years.
Can I buy health insurance for parents above 65?
Yes. Since IRDAI's 2024 changes there is no upper age limit to buy health insurance, so parents of 65, 70 or older can apply. Insurers still underwrite each proposal and may ask for medical tests or apply a co-pay, sub-limits or higher premiums, and any pre-existing disease wait can be up to 3 years. Buy separate policies for parents rather than adding them to your floater, disclose every condition and medicine, and under the old tax regime the premium you pay for parents can qualify for a separate deduction.
Is a super top-up useful without a base policy?
Only if you can comfortably pay bills up to the deductible yourself. Most families pair it with a base policy, or with employer cover, whose sum insured matches the deductible.
What happens to waiting periods if I port my policy?
When you port to another insurer at renewal, the waiting period you have already served is generally credited up to the earlier sum insured. Any increase in cover may carry fresh waiting periods for the extra amount.
Next, look at the covers that fill the remaining gaps. For premiums and deductions, see Tax for Investors, and the Money n Wealth team can help compare health insurance options.