How the Death of a Policyholder Affects Health, Car, And Home Insurance Policies?

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

How the Death of a Policyholder Affects Health, Car, And Home Insurance Policies?

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

How the Death of a Policyholder Affects Insurance Policies

The death of a loved one is often a traumatic event for everyone in the family.As the family grieves and comes to terms with the loss, they may consider getting compensation from life insurance. However, transferring or terminating the deceased’s home, car, or health insurance policies may be the last thing that comes to their minds. However, it’s essential to complete the process to eliminate any procedural issues in the future. Especially if the members are covered in a family floater plan. Let’s learn more about what the surviving family members of the policyholder should do to get the coverage details modified and why it must be done at the earliest possible instance.

What to do for each kind of insurance?

Let’s see how different types of insurance policies get affected after the death of the policyholder:

1. Health insurance:

Typically, health insurance is mainly of two types - individual health insurance and family health insurance or family floater plans. If the insured person is covered by an individual health insurance plan, the policy will get terminated after his/her demise; the nominee (appointed by the policyholder) will receive the death benefits. In the case of a family floater policy, the remaining members will continue to get coverage even after the policyholder’s death because all the members are covered under a single policy. The sum insured is shared by all of them. So, in the case of a family floater plan, after the primary insured or proposer’s death, the first thing that the surviving members should do is notify the insurance provider and get the policy details modified. A new proposer will be named in the health insurance policy for future renewals. If no claims have been raised for the deceased, the insurer will refund the premium for the unexpired policy period as per the terms and conditions specified in the plan.

2. Home insurance:

If the policyholder and the sole owner of the house dies, the house, as well as the home insurance, will be transferred to the legal heir or heirs. To initiate the process of home insurance policy transfer, the legal heirs or spouse should notify the insurance provider about the policyholder’s demise. But this step is only to keep the policy active till its expiry. Once the existing policy expires, the spouse or legal heirsneed to buy a new policy. If there are any pending claims before the policy transfer, the nominee will receive the claim amount. If there’s no nominee, the legal heirs must submit a surviving member certificate or a legal heir certificate to the insurance provider.

3. Car insurance:

The car insurance policy will not get terminated immediately after the policyholder’s death. It will be valid for 3 months from the date of the policyholder’s demise or till its expiry, whichever is earlier. After the policyholder’s death, the family members or legal heirsshould inform the insurance company to get the policy details modified. If the car insurance policy has a nominee, it will be easily transferred to the nominee. In the absence of a nominee, it will be transferred to the legal heirs. As for the No Claim bonus, it will also be transferred to the spouse or legal heirs once the ownership of the vehicle and the insurance policy is transferred. If the insured vehicle is to be sold after the policyholder’s death, the insurance policy and the RC book should be first updated with the new owner’s name.

Conclusion

Coping with the loss of a loved one is not easy. Along with that, if you have no clue what to do with the insurance policies that the deceased person has left behind, it can be a double whammy. But there’s no need to panic. Notify the insurance companies about the incident at the earliest,and they will guide you accordingly.

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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