What is the best way to insure ageing parents? Should children buy a separate health insurance policy for them, or should parents get their own coverage after turning 60? Alternatively, is it better to add them to an existing family floater? Insurance advisers often recommend separating the risk, as choosing other options can significantly affect premiums, coverage limits, and long-term financial security.
Should senior citizens purchase a policy?
A standalone insurance policy keeps the senior citizens’ sum insured separate and ensures that a hospitalisation does not reduce the coverage available for the rest of the family. It also avoids the risk of the entire floater premium rising sharply due to the parents’ age, since adding parents to a family floater can appear simple and cheaper at first. But insurers calculate the floater premium based on the oldest member.
However, this option depends on affordability. Senior citizen health plans are expensive, and premiums increase every few years. If parents do not have a steady retirement income, it becomes difficult to maintain the policy as they age.
“When parents try to buy a policy on their own at retirement age, lifestyle illnesses like diabetes, BP, heart issues, often lead to higher premiums, exclusions or even claim refusal. This is because insurers review their medical history more closely,” said Sarita Joshi, Head of Health and Life Insurance at Probus.
Also, buying a policy late, after a medical condition has been diagnosed, reduces the available options.
Should you include parents in your family floater plan?
A floater can still work in certain situations. If the sum insured is large, for instance, Rs 20 lakh or more, and the parents are relatively healthy, combining the family under one plan may be practical. It also helps when children are young and do not yet need individual coverage.
However, it is important to note that when senior citizens join the same floater plan, the family premium increases and the shared sum insured is consumed faster, often due to the parents’ hospitalisations.
Moreover, the medical inflation rate in India, estimated to be in double digits every year, means that a shared sum insured can be easily depleted in major hospitalisations, especially for chronic conditions such as cardiac ailments, diabetes, or cancers, which are more common after the age of 60.
“If you add senior citizens to a family floater plan, one major claim can leave the younger family exposed for the rest of the year. That is why advisors typically separate risks,” said Joshi.
Thus, the right choice depends on three key questions: How old and healthy the parents are, who will pay the premium in the long run, and how much total coverage the family needs.
Experts say a separate policy for parents typically offers better protection and flexibility, whereas a floater works only when coverage is extensive and health risks are low.
But, how should one approach it?
The wiser approach is for children to take the initiative and purchase a separate health policy for their elderly parents, and keep the policy dedicated to them. It ensures continuity of cover and removes the emotional hesitation parents often have about spending on themselves.
Early planning for a policy for your parents not only reduces the premium but also helps finish waiting periods before health problems become severe.
Moreover, buying a policy in a parent’s name while funding it yourself is a tax-saving option. It allows you to claim a tax deduction for up to Rs 50,000 under Section 80D for premiums paid for parents (60 and above) when opting for the old tax regime.
“A floater works best for similar age groups, like husband, wife and children. Parents, especially after 55–60, should ideally have an independent policy with a higher sum insured and restoration benefits. This way, medical events in one generation do not financially disturb the protection meant for another,” said Joshi.
Ownership of the policy provides for continuity of coverage. Chetan Vasudeva, Senior Vice President – Business Development at Elephant.in, Alliance Insurance Brokers said that the parent’s policy is not affected by a child’s change of employment, move, or financial situation, and the portability guidelines enable seniors to change insurers without forfeiting accumulated benefits.
“The senior citizen health insurance plans are specifically designed to cover risks associated with senior citizens, offering lifelong renewability, coverage for domiciliary care, disease-specific benefits, and sometimes reduced waiting periods for pre-existing conditions, which may be limited by sub-limits or co-payments in family floaters,” said Vasudeva.
The regulatory efforts by the Insurance Regulatory and Development Authority of India (IRDAI) have also improved senior citizens’ access to health insurance by waiving off the maximum entry age restrictions and encouraging greater transparency in product development.
Therefore, in summary, children should plan early by buying a separate senior citizen policy for their parents while they are still relatively healthy. This approach simplifies underwriting, allows waiting periods to start and end sooner, and makes future claims less problematic.
