A family floater policy covers all members of the family under a single policy and the sum assured can be used for the benefit of any of the members. If one member claims a certain amount, then the insurance coverage for the rest of the family is reduced to that extent for that year. The policy is bought by the proposer who pays the premium. If the proposer dies, then the policy can be transferred in the name of another member of the family, subject to he/she is a major.
For eg: Harish had taken a family floater policy where he is the proposer and primary insured. His **** Sudha and two minor kids are the other members covered under this policy. Harish meets with an untimely death in an accident. His **** Sudha can take over the policy on account of his demise. Fresh medicals will not be required as the **** and children were already covered under the policy.
Now that the members of the policy have reduced from four to three, Sudha can also ask the insurance company to reissue a fresh policy with a reduced premium. However, such requests are usually acceded to only in case no claims are made and may vary from company to company. Alternatively, Sudha can wait for policy renewal when the policy will be renewed at a reduced premium.