What Happens to Health Insurance When the Policyholder Dies?

how to verify the policy document for death benefits

To view your death benefit policy document, you can read your health insurance policy document and see what happens to your coverage if it is no longer present. a death benefit rider may also mean coverage can continue for other family members. there may be other members listed in the plan who qualify for health insurance benefits after the policyholder’s death. They are generally qualified for health insurance coverage based on their age and income.

for example, mr. John and his immediate family members were covered by a family floating health plan. Unfortunately, he went into cardiac arrest and passed away. the policy’s death benefit mentioned that other family members would continue to get health insurance coverage in the event that mr. Juan’s death the policy came in handy when his elderly mother was hospitalized after her death.

Reading: Health insurance when parent dies

A health insurance policy mentions a clause that states: In the event of the death of an insured person, the policy benefits will be paid to the beneficiary named on the death certificate or health insurance policy.

If you’re concerned about the financial well-being of your loved ones, purchasing a family float plan can ensure they have adequate insurance coverage in the event of your absence.

types of policies and examples of how death affects health insurance

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

individual health insurance policy

The policyholder is entitled to the entire sum insured in this type of health plan. they can claim for hospitalization and other benefits such as nursery treatment, ambulance expenses, etc.

death benefit

If the individual health plan covers only one insured member (the policyholder), the policy will cease to exist upon death. In this case, the family member can claim if the insured dies during hospitalization.

Under individual health insurance, a person can also name their spouse as the second insured member. the candidate will continue to receive insurance benefits after the death of the policyholder.

example 1

mr. kedar purchased a health insurance policy where he was the only insured member. he had appointed his wife, the lady. kedar as the nominee. Unfortunately, Kedar had a serious accident and was hospitalized. he succumbed to the injuries 12 days after hospitalization. Mrs. kedar was eligible to get the hospitalization claim as she was the nominee of kedar’s health plan.

If I hadn’t named Mrs. kedar as a nominee, she would not have directly received the amount of the claim. In such cases, the insurance company requests a probate certificate from the court of law and pays the claim amount to the next of kin.

example 2

Some health insurance plans cover two people under the same policy. For example, let’s say Vivian and his wife, Tina were covered by health insurance with an insured sum of Rs. 5 lakhs. sadly, tina passed away during childbirth. in this case, the health policy will continue to cover vivan up to the insured amount until the expiration of the plan. then you can choose to buy a new plan to cover yourself and your newborn. hospitalization expenses for tina for childbirth will be paid to vivan according to the terms of the policy.

family floating health plan

Members of the policyholder’s immediate family are covered with health insurance benefits under a floating family health plan. the sum insured is used by all affiliates until exhaustion.

death benefit

A family floating health insurance policy continues to provide coverage to the remaining insured members in the event of the death of the primary insured member. If the person paying the premium dies, the next of kin must contact the insurance company and inform them of the death. the insurer will try to endorse the current policy and send the details of the updated policy.

See also: Nine ways to lower your auto insurance costs | III

See also: How to Write an Insurance Cancellation Letter | Insureon

example

mrs. taniya was covered by a family health plan in which her father was her main insured. she died of natural causes during the policy period. after a month, taniya had a minor accident. She notes that the health insurance policy is still active, but she was unaware of the benefits of the coverage.

the death benefit of the family float policy allowed for continuation of health insurance coverage for mrs. taniya, hers two brothers of hers and her mother. but, since she was unaware of her father’s coverage, she paid the cost of the treatment out of her pocket.

group health insurance policy

An employer often offers a group health insurance policy to employees. It is similar to a family floating health plan, but the employer has significant 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 dies, then the policy ceases to exist. coverage cannot be offered to dependents unless explicitly mentioned in the policy. if there is a death benefit clause in the policy, the next of kin can receive a lump sum.

In another situation in which a covered family member dies, the policy will be endorsed, that is, it will be updated with the list of remaining dependents. thus, the rest of the family members can continue to enjoy health insurance coverage.

See also: Nine ways to lower your auto insurance costs | III

See also: How to Write an Insurance Cancellation Letter | Insureon

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 traffic accident. the health insurance policy ended with her death. The employer paid compensation to the family but was unable to continue to provide them with health insurance benefits as there was no such provision in the policy.

critical illness plan

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

death benefit

A critical illness plan generally does not offer a death benefit. in fact, the insured person must survive for a fixed number of days after diagnosis in order to file a claim. the policy is void if the insured member dies during this window.

See also: Nine ways to lower your auto insurance costs | III

See also: How to Write an Insurance Cancellation Letter | Insureon

example

mr. Diwan purchased a critical illness health plan that included cancer coverage. After about three months of purchasing the plan, he was diagnosed with the disease. the survival period under mr. Diwan’s health plan was for 20 days but sadly he passed away 15 days after diagnosis. the insurance company was unable to pay the death benefit to his family under the terms of the policy.

medical insurance for the elderly

This type of health insurance plan is similar to an individual health insurance policy. however, the benefits are offered to a person over the age of 60.

death benefit

The policy ceases to exist if the insured dies.

See also: Nine ways to lower your auto insurance costs | III

See also: How to Write an Insurance Cancellation Letter | Insureon

example

mr. Ansari purchased a senior health plan for his widowed father. after a while, her father passed away due to old age. the insurance company paid the costs of the corresponding treatment, terminating the health plan; there was no death benefit under the policy.

Note: Please refer to your health insurance plan’s policy wording for a full understanding of coverages, benefits, and exclusions.

to go

It is crucial to be aware of the death clause of the policy and to inform your family about it. For example, under a family float policy, the policyholder’s death cannot terminate the health insurance policy. you can continue as long as premiums are paid and the information provided to your insurer is accurate. another insured member may pay the premium after informing the insurer of the policyholder’s unfortunate death.

On the other hand, it is also incorrect to assume that health insurance coverage will continue as before, even after the death of the policyholder. so make an informed decision by weighing all the possibilities as you shop for your health insurance coverage and build financial backing.

frequently asked questions

Here is a list of common questions about the implications of death on a health insurance policy. you can contact acko by sending an email to [email protected] in case of further questions.

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