Understanding Health Insurance After Policyholder's Death

Health Insurance Policies have become necessary to cope with the increasing costs of healthcare services and advanced medical treatments. With these policies in hand, an individual or family members feel more protected and financially secure during medical emergencies.

Let's assume Rakesh, an ordinary family person, bought a health insurance policy a few months back but recently died in an accident. In such a case what will happen to the policy and its benefits? Also, how can one claim after the policyholder's death? What is the actual process? In this blog, we will talk about these basic concerns related to health insurance after the policyholder's death.

What Happens To Health Insurance After the Policyholder's Death?

Here is how different types of health insurance policies manage coverage in case of policyholder’s death:

1. Individual Health Insurance Policy

Only one member, i.e., the policyholder gets coverage under this plan. Thus, in case of death, the policy will expire upon the policyholder's death. The family members have the right to raise a claim if the death incurred during hospitalization or treatment. The Insured's spouse or children added as a nominee during the initial purchase policy agreement can receive the claim for hospitalization expenses upon the death.

For example, Rakesh purchased an individual health insurance plan and added his wife Sita as a nominee. During the car accident, he was hospitalized and stayed there for 10 days due to injuries but died due to complications. In such a case, the wife can raise a claim for hospitalization expenses.

2. Family Floater Health Plan

A Family Floater plan covers health insurance for all family members added to the policy during purchase. If the primary member of the policy dies, the other family members under the same policy are eligible to continue getting coverage. The other members must inform the insurance provider in such a case and request updated policy details as early as possible.

Rakesh applied for a family floater plan covering himself, his mother, his wife Sita, and two children. After his demise, the coverage benefits will continue to be received by his wife, mother, and two children.

3. Group Health Insurance Policy

A group health insurance policy is provided by employers to their employees. It works quite similarly to a Family Floater Health Plan, where the employer is the primary member and has maximum control. In case an employee suffers death, the coverage will not be passed to the dependants unless it is clearly specified in the policy. However, if the death benefit clause exists, the beneficiaries can claim compensation.

4. Critical Illness Plan

No death benefit is offered in the case of a Critical Illness plan. It is important the insurer continues to live a certain number of days after getting diagnosed with a specific critical illness. If during this period, the policyholder dies then the policy will become void. 

Rakesh purchased a Critical Illness Plan that included coverage benefits. After the policy was purchased, he was diagnosed with the illness. As per the policy, the survival period for such cases was around 20 days but Rakesh couldn't survive that long and died within 17 days of diagnosis. In this case, the family will not be paid any death benefit.

5. Senior Citizen Health Insurance

Senior Citizen Health Insurance plans work quite similar to individual health insurance plans in policyholders’ death cases. The plan benefits are available for people above 60 years but if they die due to illness or old age, the policy will expire.

Rakesh bought a Senior Citizen Health Insurance Plan for his father who died at 80 years of age. After his death, the insurance company will only pay for the incurred treatment cost. No other death benefits will be provided to the nominee in this case.

Common Misconceptions About Health Insurance in Such Situations

Here are a few common myths about health insurance plans in death cases:

1. Health Insurance and Life Insurance are similar in Death Case

Most people have a misconception that health insurance providers offer the entire lump sum amount to the nominee in case of a policyholder's death, like life insurance plans. However, this is not true. Unlike life insurance plans, health insurance policies cover medical costs that policyholders incur before their death. There are also a few policies that include funeral costs cover.

2. Coverage Gets Transferred to Family Member

If the policyholder has purchased an individual policy, the coverage will not be automatically transferred to the family members. Instead, the policy will expire upon your death, and the associated benefits will be transferred to the nominee. In case, there is no nominee, there can be legal complications during the settlement procedure.

3. Refundable Premiums

Some people even have a misconception that if an insured individual dies during the policy tenure, the unused premium amount will be refunded. Again, this is untrue, no unused premium is refunded after the policy expires.

Health Insurance Claim Process After Policyholder’s Death

The nominee or beneficiary has the access to file a claim for medical expenses that the policyholder incurred before their death using the following method:

1. Notify the Insurer: It is important to notify your insurance provider about the policyholder's death as early as possible to avoid any delays in the claim process.
2. Submit Documents: Arrange all the documents, including hospital bills, medical reports, death certificates, filled and signed claim forms, etc., to initiate the process.
3. Claim Filing: The next step is to file your claim and let the insurance team review all the submitted documents. The team will verify your submitted documents and check if they fall under the policy's terms and conditions.
4. Claim Settlement: Once the claim is reviewed and approved, all medical costs that the insured individual incurred before death will be settled by the insurance provider.

Can Family Members Continue Health Insurance Coverage After Policyholder’s Death?

If the policyholder purchases an individual health insurance plan and dies due to an unforeseen event, the policy will expire. The family members cannot continue getting policy coverage or benefits for their medical expenses.

However, if the policyholder purchases a family floater health insurance plan that includes other family members in the same policy, in such a situation family members can continue getting coverage benefits. It is best to consult your insurance provider to get more details on the coverage and how the policyholder's death can affect their current family plan.

Nominee or Beneficiary in Health Insurance

A nominee can be a single person or a group of people that the policyholder nominates for claiming health insurance benefits in case of demise. In case, the policyholder dies due to an accident or during medical treatment, the nominee has the right to file a claim for incurred medical expenses. It is essential that the nominee's name must be provided in the insurance policy agreement by the policyholder. It is not mandatory, but not having a name can result in legal complications at the time of claim settlement.

A beneficiary, on the other hand, is the person who is entitled to receive death benefits. It can be your family members, i.e., spouse, children, or a parent. A beneficiary must also be nominated during policy purchase so that during the claim settlement process, there is no confusion.

Conclusion

In case of a policyholder’s death, some policies provide coverage to family members whereas others do not support this option. Different health insurance plans have different options available. It is important to identify and understand what options are available under your selected insurance policy. Also, understand how a claim is filed after the policyholder’s death.

FAQs

Ques 1: If I pass away, will the cost of my Family Floater health insurance coverage increase?

Ans: No changes will be made to the policy's premium, even if you are no longer around. However, in the case of a Family Floater health plan, the other family members have the option to customize the existing policy and benefits after the primary person's death, which can eventually impact the policy premium.

Ques 2: Is it compulsory to notify the insurance provider as soon as the policyholder passes away?

Ans: Yes, it is essential to notify the insurer as early as possible to avoid any delays in processing claims for hospitalization expenses and treatment.

Ques 3: Is it possible to cancel the Family Floater Plan after Death?

Ans: As long as the premium is paid by other members after the primary person's demise, the plan will continue offering coverage. However, you can together make a call and decide to terminate the policy.

Ques 4: For how long after death does health insurance remain valid?

Ans: It depends entirely on the type of health insurance plan selected and their terms and conditions.

Ques 5: Does filing a health insurance claim require the policyholder's death certificate?

Ans: Yes, it is essential to submit the policyholder's death certificate when raising a claim.