What Will Happen to The Health Insurance Policy After the Policyholder’s Death?

Posted on: Jan 20, 2023 | | Written by:

What Will Happen to The Health Insurance Policy After the Policyholder’s Death?

Published on January 20, 2023. EST READ TIME: 3 minutes

We buy a health insurance policy to protect ourselves financially during medical emergencies. But have you wondered what happens to the healthcare plan in case of the policyholder's demise? Most policyholders are not well aware of the death benefit clause mentioned in the policy. Well, the clause works differently depending on the type of healthcare plan one has taken. For instance, the policy will not get terminated under a Family Floater Plan even after the primary policyholder's death. When buying the policy, one should also focus on this clause which is easy to miss. Therefore, let's clear the doubts surrounding the benefits of the clause.

How to check the policy document for death benefits

Before buying a health insurance plan, read the terms and conditions of the policy to know about the death benefit clause. Will the rest of the family members continue to get coverage after your death? Will it become null and void? If you takeindividual medical insurance, the policy will get terminated after your death and death benefit will be given to the nominee. If there’s no nominee, it will go through several legal tangles before finally getting settled. If you are buying individual health insurance for each family member, make sure there’s always a nominee. But in the case of afamily floater health plan, the other insured members will continue to receive the benefits even after the policyholder’s death. But there’s one condition – the policy should be renewed on time.

Types of policies and examples of how death affects health insurance

1. Individual health insurance policy:

An individual health insurance provides coverage to a single person. So, the policy will become invalid on the death of the insured. If the insured appoints his/her spouse or any family member as a nominee, he/she will get the insurance or death benefits upon the policyholder’s demise. For example, Rahul bought an individual medical insurance, and his wife is the nominee. He suffered a major illness and unfortunately succumbed to the ailment after 10 days of hospitalisation. As his wife is the nominee, she can claim the hospitalisation expenses. However, if there is no nominee, the insurance company would seek a succession certificate legally and compensate the next of kin. It may take months to get the claim settled.

2. Family floater health insurance:

In this type of healthcare plan, the other family members will still be covered if the primary insured member dies. This is because a family floater covers all members of the family under a single plan. If this primary insured member was paying the premium, the insurance company must be informed about the demise so that the insurer can update the existing policy.For instance,Karan, the primary insured member of a family of four, met with an accidental death during the policy period. A few days after this unfortunate event, his spouse had to be hospitalised, and the medical expenses came to around Rs 5 lakh. She had to bear the expensesas she was unaware of the coverage benefits of a family floater health plan. Since the policy was active, she was eligible to claim the expenses. To stay covered, the policy has to be renewed by paying the premium on time.

3. Group health insurance:

This type of insurance is offered by an employer to employees, and the employer decides the policy coverage and its benefits. Upon the employee’s demise, the policy will cease to exist, and the dependents will not get any coverage unless it is mentioned in the policy. If the policy has a death benefit clause, compensation will be provided to the next of kin. In another situation, the policy will be updated with the list of remaining dependents. For example, Sahana and her family were covered by her employer’s group health insurance. After Sahana met with an unfortunate accidental death, the employer provided compensation to the family but stopped coverage benefits as the policy did not have such a clause.

4. Critical illness insurance:

In a critical illness plan, the insured must survive a certain period upon diagnosis to avail of the benefits. If the insured member dies within this period, the policy will become null and void. It doesn’t offer death benefits. For example,after 2 months of buying critical illness insurance, a person gets diagnosed with cancer. The survival period under the critical illness coverage is 30 days, but the policyholder dies within 10 days of diagnosis. His/her family will not get any benefits as per the terms and conditions of the policy.

5. Senior citizen health insurance:

The policy becomes invalid after the policyholder’s death. For instance,Mr A purchased senior citizen health insurance for his 70-year-old father. On his death, the insurance company paid only the treatment costs but no death benefit.

Frequently Asked Questions

1. Is death covered in health insurance?

Yes, it is covered depending on the terms and conditions of the policy. The coverage is called a death benefit.

2. How long is the health insurance valid after the policyholder dies?

If it’s an individual health insurance policy, it will be invalid after the demise of the insured. But in the case of a family floater plan, the other insured members will continue getting coverage provided the policy is renewed on time.

3. If one of the parents dies, will the family health insurance expire?

Under a family floater plan, as long as the policy is active with timely renewal, the rest of the family members will continue to get coverage.

Conclusion

Health insurance provides financial backup during a medical crisis. So, when buying health insurance, you and your family must be aware of the clauses relating to the policyholder's death. The terms and conditions of death benefits differ for various plans, so go through the clauses properly and make an informed choice.

Disclaimer: The above information is for illustrative purpose only. For more details, please refer to policy wordings and prospectus before concluding the sales.

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