Living Wills may not affect Insurance payouts

Supreme court has legalized a living will, which means a person can be taken off life support if they have slip in to a comatose state and need life support to survive. But the insurance companies have said that this may not affect their insurance payout as they would want to honor their terms.

Since this is considered euthanasia, or voluntary death, insurance companies consider this suicide. This worried a lot of senior citizen concerned about their families that they won’t be paid the sum assured, in case they chose to end care in case it becomes unbearable and ending life support would be better. Earlier insurance companies would process claims after three years of a person’s demise by suicide. But from January 1, 2014, the Insurance Regulatory and Development Authority of India mandated the companies selling insurance policies to effect changes in their agreements to make provision for some payment to the kin even if a policy holder committed suicide within a year.

This change included a traditional policy and a market link policy. In a market link policy, the nominee will get 100 fund value one year after the person’s suicide.

If a person has paid a premium of Rs 1 lakh for the first year and of which the insurance company invested 80,000 in mutual funds and kept rest for insurance cover, then upon his suicide, his nominee would get back Rs 80,000.

In a traditional life insurance policy, there is still debate whether the nominee will get the sum assured in case the insurer chooses to end his life, which is considered suicide by the insurance company. While some reports claim that the nominee should receive 80% of the sum assured, there are some report that say that no insurance company pays the claim in case of suicide if it’s a traditional insurance plan.

HDFC LIFE offers various Life insurance plans to you to secure the financial future of your family in case of any unforeseen events.