Health Insurance — Family Floater, Sum Assured, Top-Up

Three decisions matter when buying health insurance. First, the sum assured. Indian medical inflation runs 12-15% annually — far above general CPI. A typical mid-tier private hospital admission for serious illness today costs ₹3-15 lakh; major surgery or extended ICU can exceed ₹25 lakh. The right family sum assured for most middle-class families is ₹10-25 lakh as the base coverage, with additional Top-Up of ₹50 lakh-₹1 crore beyond a deductible. Buying ₹3 lakh family floater (a common starter choice) is dramatically inadequate today and should be upgraded as a priority. Second, the structure. For most families, a Family Floater policy is the most cost-efficient — single sum assured shared across self, spouse, children. Premium for a family of four (2 adults age 35-40, 2 children) for ₹15 lakh sum assured is typically ₹15,000-25,000 per year, depending on insurer and city. The risk of a Family Floater is that if multiple members need hospitalisation in the same year, the sum assured may be exhausted by one large claim. The mitigation is adding a Top-Up policy: a Super Top-Up with ₹50 lakh sum assured above a ₹5 lakh deductible costs only ₹4,000-7,000 per year. Combined: ₹15 lakh base + ₹50 lakh top-up = ₹65 lakh available cover for ~₹22,000-30,000 annual premium for the family. Third, the policy features. Critical features to verify: (a) Pre-Existing Disease (PED) waiting period — typically 2-4 years; the shorter the better; (b) Room Rent capping — avoid sub-limits ("1% of sum assured per day") which restrict you to lower-tier rooms during admission; the better policies have no room-rent capping; (c) Co-payment — some policies impose 10-20% co-payment on claims, particularly for senior citizens; avoid where possible; (d) Network hospitals — verify that the insurer's network includes the leading hospitals in your city for cashless admission; (e) Claim Settlement Ratio and Incurred Claims Ratio — published by IRDAI; (f) Cumulative Bonus / No-Claim Bonus — many insurers increase the sum assured by 10-50% per claim-free year, often a meaningful long-term benefit. The mistake to avoid: focusing only on premium. The cheapest policy is rarely the right choice — the difference between a ₹20,000 and ₹28,000 annual premium for the same ₹15 lakh sum assured may reflect material differences in room-rent capping, sub-limits, and claim-settlement experience. Always compare like-for-like across features, not just headline premium.