Does Health Insurance Cover Death?
Updated On Nov 09, 2023
Health insurance covers hospitalisation and medical bills; unfortunately, it won't do if you want to support your loved ones after your unfortunate demise. For that, you must purchase policies, like a life insurance or a term insurance. Continue reading if you want to know more about insurance with death coverage.
Covering death means your loved ones can claim insurance upon your demise. And they will get the sum insured; this can be a one-time or regular payment over several years.
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Why Does Not Health Insurance Cover Death?
Health insurance only covers hospitalisation and the expenses incurred within a specific number of days before and after hospital admission. It does not cover death as health insurance only pays for the expenditure to the insured person while covering death means providing a lump sum to loved ones. It becomes a different agreement, and insurance companies have other policies covering death to reduce complexity.
Why Should You Purchase a Death Insurance Policy?
Your income provides a certain kind of lifestyle to your family. And your unexpected demise may rattle that; the shock and emotional stress can shatter your loved one's well-being. They will need some time to recover from your death insurance policy, and a life insurance policy will provide a helping hand during that time. It can:
- Support your child's education in your absence.
- Support the daily needs of your family until they find a means
Types of Insurance Policies That Cover Death
Several types of policies cover death:
- Personal Accidental Cover: Your loved ones get the sum insured if your death is due to an accident under accidental death insurance.
- Life Insurance: This policy will support your loved ones after your death. The nature of your death does not matter; your nominee can receive a lump sum or a fixed payment for a certain number of years. Moreover, you get a certain amount even if you survive the policy term under life insurance.
- Term Insurance: If you don't care about the saving component of life insurance, term insurance is the best choice. Term Insurance plan provides a considerable sum insured for relatively small premiums compared to life insurance.
Tips for purchasing a policy covering death
You must consider the following points before purchasing a policy to protect your loved ones upon your demise:
- Ensure that you choose the right type of plan; for example, accidental cover and life insurance are two types of policies that cover death. However, the accident cover won't provide the sum insured if the policy owner's death is natural.
- The sum insured must be enough for your family members to adjust to your death; a sum insured 100 times your monthly salary should be enough.
- You must think carefully about the exclusions; term insurance may not cover some deaths, including critical illness or death due to a pre-existing disease.
- Check whether your policy provides a global cover; the insurer won't accept the claim if you die abroad.
What happens to health insurance after death?
Health insurance does not provide monetary benefits after death. So the natural question is, what happens to it? After the insured person's death, the health insurance goes to the nominee. That means you must provide a nominee, and that person will start receiving your health insurance benefits after you die.
In conclusion, health insurance does not cover death but gets transferred to your nominee. However, there are other kinds of insurance to provide monetary benefits to your loved ones after your demise.
- What is a critical illness cover?
Critical illness coverage is a particular health insurance policy focusing on a narrow disease group. However, a critical illness gives you the sum insured as a one-time payment instead of just the expenses. You can claim the insurance amount when diagnosed with the covered critical disease. For example, once diagnosed with a heart attack, you can claim and get the sum insured. The only con of a critical illness cover is that you can't claim the amount if diagnosed with any other disease.
- What are the differences between a term plan and a life insurance?
Though both term plan and life insurance provide monetary benefits to your loved ones after your demise, there are specific differences:
Term insurance becomes invalid after the policy term ends; you don't get any monetary benefit after surviving. For a life insurance policy, you have a savings component. That means survival also provides you with some financial gains.
Premiums of term insurance are significantly lower than that of a life insurance policy for a similar sum insured. The reason is the lack of monetary benefit upon survival.
- Is a life insurance policy necessary if you have health insurance?
Life insurance and health insurance policies offer entirely different benefits. While a life insurance policy provides a monetary benefit to your loved ones upon your demise, health insurance supports you during hospitalisation. Therefore, having health insurance and a life cover increases financial protection for your loved ones.
- Does term insurance cover all types of death?
Term insurance does not cover all types of death; these include
- If the policyholder was involved in criminal activities or was murdered by the beneficiary
- The policyholder had a pre-existing, and they did not declare it.
- The death was due to a terminal or critical illness, like cancer.
- If the policyholder died due to self-harm or suicide
- Does a personal accidental policy cover natural death?
If the death was natural, you can't claim the sum insured for a personal accidental policy. To cover natural death, you must purchase a term or life insurance plan.
- What is a co-pay in insurance?
Insurance policies provide benefits up to a sum insured upon a valid claim; however, some insurance policies have a co-pay clause, which means the policyholder must pay a certain amount out of his pocket. This amount depends on various factors, including the policy type and the policyholder's age.