Why family size matters in health insurance plans

Updated on 28 Nov 2025

Health insurance plays a vital role in protecting your family against rising medical costs. Family health plans offer shared coverage under one policy, making them more convenient and cost-effective. As your family grows, the size directly impacts the premium, making it essential to choose a plan that suits your needs.

Let’s understand how family health insurance works, why it can be beneficial and how the number of people in your family can impact what you pay for it.

How does family health insurance work?

Family health insurance is a single policy covering multiple members of a family. Instead of getting separate policies for each person, one plan includes the policyholder, spouse, children, and sometimes even parents.

There are mainly two types of family plans:

• Family floater plans: A single insured amount is shared among all members. Any member can use the full coverage if needed.
• Individual sum insured within a family plan: Each member has a fixed amount of cover under the same policy.

What are the benefits of opting for family health insurance plans?

Here are some key benefits of opting for a family health insurance plan:

• Affordable: Buying one policy for the entire family is usually more economical than purchasing individual plans for each person. It reduces the overall cost of coverage.
• Convenient: With only one policy to renew and track, managing your medical insurance becomes easier.
• Wide coverage: Most family health insurance plans provide comprehensive coverage, including hospitalisation, day-care procedures, ambulance charges, and sometimes preventive care.
• Cashless hospitalisation: Many insurers have tie-ups with network hospitals where you can get treatment done without paying upfront.
• Easy to add new members: If there’s a new member in the family, like a newborn baby or a spouse, they can often be added to the policy during the term or at renewal.

Things to consider before buying family health insurance plans

Before choosing a plan, it’s important to think about your family’s needs. Here are a few key factors to consider:

• Age of members: The age of the oldest family member affects the premium. Plans that include senior members may cost more, as older people are more likely to need medical care.
• Health history: If any member has a pre-existing health condition, the insurer may increase the premium, apply waiting periods, or exclude some conditions.
• Number of people covered: Adding more members increases the premium. However, the extra cost is often lower than buying a separate plan for each person.
• Adequate sum insured: Make sure the sum insured is good enough to cover all family members, especially in case more than one person needs treatment in the same year.
• Hospital network: Choose a plan with a wide hospital network, especially with good hospitals close to your home. This helps in emergencies and ensures smoother cashless claims.
• Room rent limits: Some plans limit the type of hospital room you can stay in. Check if the plan allows private rooms or if there are restrictions.
• Maternity and childcare benefits: If you are planning to start or grow your family, look for plans that offer maternity cover, newborn care, and vaccinations.
• Waiting periods: Certain benefits, like pre-existing disease cover or maternity, may only be available after a waiting period.

How family size affects health insurance premiums?

Your premium is not only based on coverage and features, but also the number of people in the plan. Here's how family size plays a role:

1. More members = higher premium

Each additional member increases the risk for the insurer. So, the premium rises with more people, though usually at a lower rate than buying separate plans.

1. Age mix of members

The age of the oldest member often determines the overall premium. For example, if you include elderly parents along with young children, the premium may be higher than expected. In such cases, some families choose to get medical insurance for parents on a separate policy.

1. Shared coverage in floater plans

In floater plans, the entire sum insured is shared. If one person uses a large part of it, less is left for the others.

1. Higher chance of medical claims

More members mean a higher chance that someone may need treatment. This increases the risk from the insurer’s point of view, which can lead to a higher premium.

1. Customisation options

Some insurers allow different coverage levels for different family members, which gives flexibility but can also affect pricing.

Conclusion

A family health insurance plan is a practical and often cost-effective way to protect your entire family. It’s easier to manage than multiple individual plans and can offer wide-ranging benefits.

However, family size plays a key role in deciding the premium. Choose a plan that offers the right balance between coverage and affordability. If you’re unsure which plan is right for your family, we’re here to help. Just fill out the form on this page to get simple, personalised health insurance advice. Let us help you make the right choice for your family’s future.

FAQs

• Is family health insurance cheaper than individual policies?

Yes, in most cases. Covering the whole family under a single plan is often more affordable than buying separate plans.

• Can my parents be included in the same family plan?

You can, but it may increase the premium due to their age. Many people prefer a separate plan for parents to manage costs better.

• What if more than one person needs hospital care in the same year?

In floater plans, they will share the same sum insured. If the total expenses go beyond the insured amount, the rest must be paid from your own pocket.

Disclaimer: The information provided in this blog is for educational and informational purposes only. It is not intended as a substitute for professional advice, diagnosis or treatment. Please consult a certified medical and/or nutrition professional for any questions. Relying on any information provided in this blog is solely at your own risk, and ICICI Lombard is not responsible for any effects or consequences resulting from the use of the information shared.