What Happens to Health Insurance After Death?

What Happens to Health Insurance When the Policyholder Dies?

If the policyholder dies while the health insurance policy is still active, a death benefit clause comes into the picture. This death benefit clause can have different outcomes depending upon the type of a health plan. Through this article, we aim to clear the confusion regarding the death benefits of each type of policy. Read ahead to know more.

If the policyholder dies while the health insurance policy is still active, a...

How to Check the Policy Document for Death Benefits

To check the policy document for death benefits, you can read your health insurance policy document and see what happens to your coverage in case you are no longer around. A death benefit clause may also mean that the coverage can continue for the other family members. There could be other members listed under the plan that are qualified to receive health insurance benefits after the policyholder's death. They are generally qualified to get health insurance coverage based on their age and income.

For example, Mr. John and his immediate family members were covered under a Family Floater Health Plan. Unfortunately, he suffered a cardiac arrest and passed away. The policy's death benefit mentioned that other family members would continue to get health insurance coverage in case of Mr. John's death. The policy was helpful when his ageing mother was hospitalised after his passing.

A medical insurance policy mentions a clause that states — in case of an insured person’s death, policy benefits shall be paid to the beneficiary named in either the death certificate or the health insurance policy.

If you are worried about the financial well-being of your loved ones, then buying a Family Floater Plan can ensure that they have adequate insurance coverage in case of your absence.

Cancelling Health Insurance after Death

If one dies and has an active health insurance policy, then the policy needs to be cancelled with the insurer in order to stop paying further premiums and tackle other administration issues. Following is a simple process to be followed.

Intimate the Insurance Company

The death of the policyholder should be brought to the notice of the health insurance provider at the earliest possible. Most often, this might be done through a telephone call to customer service or by a written notice.

Provide all Required Documents

The insurance company may require some documents to process this cancellation. This usually includes a copy of the death certificate and any other additional paperwork.

Request Confirmation of Cancellation

Make sure that the insurance company confirms the cancellation in writing. This confirmation helps to close the policy formally and acts as proof that the policy is terminated.

Check for Refunds

In some instances, if the policyholder prepaid a premium in advance, it could mean getting a refund for the remaining months left that were not used. Contact the insurance company to know if an applicable refund is available and the procedure through which this would be conducted.

Review Policy Terms

Some policies may have certain conditions within their clauses regarding how to handle cancellation upon death. The review of such terms can ensure all procedures are followed correctly.

Types of Policies and Examples of How Death Affects Health Insurance

Let’s understand how each type of health insurance policy deals with the policyholder’s death and what exactly happens to the coverage.

Individual Health Insurance Policy

The policyholder is entitled to the full amount of the sum insured in this type of health plan. They can claim for hospitalisation and other benefits like Day Care treatments, ambulance expenses, etc.

Death benefit: If the Individual health plan covers only one insured member (the policyholder), then the policy will cease to exist upon death. In this case, the family member can raise a claim if the policyholder suffers death during hospitalisation.

Under Individual medical insurance, a person can also name their spouse as the second insured member. The nominee will continue to receive insurance benefits upon the policyholder's death.

Example 1

Mr. Kedar, bought a health insurance policy where he was the sole insured member. He had appointed his wife, Mrs. Kedar as the nominee. Unfortunately, Kedar had a major accident and was hospitalised. He succumbed to the injuries 12 days after hospitalisation. Mrs. Kedar was eligible to get the claim for hospitalisation expenses as she was the nominee of Kedar's health plan.

If he had not appointed Mrs. Kedar as the nominee, she would not have directly received the claim amount. In such cases, the insurance company seeks a succession certificate from the court of law and pays the claim amount to the next of kin.

Example 2

Some health insurance plans offer coverage to two individuals under the same policy. For example, say Vivan and his wife, Tina were covered under health insurance with a sum insured of Rs. 5 lakhs. Sadly, Tina passed away during childbirth. In this case the health insurance policy will continue to cover Vivan up to the sum insured until the plan expires. He can then choose to buy a new plan to cover himself and the newborn. Tina's hospitalisation expenses for delivery will be paid to Vivan as per policy terms.

Family Floater Health Plan

Policyholder’s immediate family members are covered with health insurance benefits under a family health insurance plan. The sum insured is used by all members until exhaustion.

Death benefit

A Family Floater Health Insurance Policy continues offering coverage to the remaining insured members in case the primary insured member dies. If the person paying the premium suffers death, the next of kin must contact the insurance company and inform them about the death. The insurer will try to make an endorsement in the current policy and send the updated policy details.

Example

Ms. Taniya was covered under a Family Health Plan where her father was the primary insured member. He died of natural causes during the policy period. After a month, Taniya had a minor accident. Note that the health insurance policy is still active, but she was not aware of the coverage benefits.

The death benefit of the Family Floater Policy allowed continued health insurance coverage for Ms. Taniya, her two siblings and her mother. But, since she was unaware of her father's coverage, she paid for the cost of treatment out of her pocket.

Group Health Insurance Policy

An employer usually offers a Group health insurance policy to the employees. It is similar to a Family Floater Health Plan, but the employer has major control over the policy and its benefits. This is because the employer pays the premium for basic health insurance coverage.

Death benefit

If the employee suffers death, then the policy ceases to exist. The coverage cannot be offered to the dependants unless explicitly mentioned in the policy. If there is a death benefit clause in the policy, the next of kin may receive a lump sum.

In another situation where a covered family member dies, the policy will be endorsed, i.e. updated with the list of remaining dependants. Thus, the rest of the family members can continue to avail health insurance coverage.

Example

Mrs. Shruti worked for a multinational company, and health insurance for the family was one of the benefits of working with them. Unfortunately, she died in a road accident. The health insurance policy ended upon her death. The employer paid compensation to the family but could not continue to provide medical insurance benefits to them as there was no such clause in the policy.

Critical Illness Plan

This particular health insurance policy offers a lump sum payout to the insured member upon the diagnosis of a listed illness.

Death benefit

Usually, a Critical Illness plan does not offer a death benefit. In fact, the insured person must survive for a fixed number of days after diagnosis to be able to make a claim. The policy becomes void if the insured member suffers death during this window.

Example

Mr. Diwan purchased a Critical Illness Health Plan that included coverage for cancer. After around three months of buying the plan, he was diagnosed with the disease. The survival period under Mr. Diwan's health plan was 20 days, but unfortunately, he passed away 15 days after the diagnosis. The insurance company could not pay the death benefit to his family under the terms of the policy.

Senior Citizen Health Insurance

This type of health insurance plan is similar to an Individual Health Insurance Policy. However, the benefits are offered to a person above the age of 60 years.

Death benefit

The policy ceases to exist if the insured person suffers death.

Example

Mr. Ansari bought a Senior Citizen Health Plan for his widowed father. After a while, his father passed away due to old age. The insurance company paid the applicable treatment costs, ending the health plan; there was no death benefit as per the policy.

Note: Kindly refer to the policy wording of your health insurance plan to get an in-depth understanding of the coverages, benefits, and exclusions.

Takeaway

It is crucial to be informed about the death clause of the policy and inform your family about it. For example, under a Family Floater policy, the policyholder's death may not terminate the health insurance policy. It may continue as long as premiums are paid and the information given to your insurer is accurate. Another insured member can pay the premium after informing the insurer about the policyholder's unfortunate demise.

On the other hand, it is also incorrect to assume that health insurance coverage will continue as before, even after the policyholder's death. Thus, make an informed decision by weighing all possibilities while buying your health insurance coverage and creating a financial backup.

What Happens to Health Insurance When the Policyholder Dies?

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How to Check the Policy Document for Death Benefits

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Cancelling Health Insurance after Death

Intimate the Insurance Company

Provide all Required Documents

Request Confirmation of Cancellation

Check for Refunds

Review Policy Terms

Types of Policies and Examples of How Death Affects Health Insurance

Individual Health Insurance Policy

Example 1

Example 2

Family Floater Health Plan

Death benefit

Example

Group Health Insurance Policy

Death benefit

Example

Critical Illness Plan

Death benefit

Example

Senior Citizen Health Insurance

Death benefit

Example

Takeaway

Frequently asked questions

What happens to health insurance when you die?

How to get health insurance refund after death?

Does health insurance cover death?

Is death covered in health insurance?

When to cancel health insurance after death?

Will my Family Floater health insurance policy's premium increase if I am no longer around?

Is the policyholder's death certificate required to raise a health insurance claim?

Does health insurance cover death?

How to claim the cost of treatment for the deceased insured member?

When to cancel Family Floater Health Insurance after death?

Will our family’s health insurance plan expire if one of our parents dies?

How long does health insurance last after death?

How to claim health insurance after the death of a spouse?

Can we claim a health insurance refund if the policyholder suffers death?

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