Can a Life Insurance Cover for Suicidal Death?

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Suicide is a sensitive topic, but unfortunately, it’s a common subject nowadays. Since the purpose of life insurance policies is to protect the beneficiaries in the event of the covered person’s death, it’s understandable to ask: Does life insurance pay for suicidal death? This article presents valuable information on this theme.

When Does Life Insurance Pay for Suicidal Death?

Life insurance companies need to protect themselves from anyone who purchases a life insurance policy intending to end their life so that their family members can receive life insurance payments. Suicide is not typically covered in the first two years of the insurance policy—a period referred to in a suicide clause of the policy. It is, however, covered after those two years, as seen below.

The Suicide Provision

A suicide provision (or clause) is something that life insurance companies will commonly include in the death insurance policy. It defines the specifics surrounding your coverage if you choose to commit suicide. For example, the beneficiaries probably won’t receive benefits if a suicide occurs before the policy’s exclusion limitation is reached. The provision period is typically valid for two years but varies, depending on the insurance company.

Other policies may require reporting addiction or mental health issues. If you don’t provide such information, your policy can be invalid. But insurers are more forgiving of those issues when they show up after you’ve already bought your policy.

So depending on the suicide life insurance, it’s possible to be protected from a rate increase if a mental health issue is reported after you purchase the insurance. But the chances that a new insurer won’t approve you are higher if you have a history of mental illness.

The way an insurance company handles mental health can vary. Therefore, it’s crucial to identify the limitations before buying a policy.

The Incontestability Clause

In a life insurance suicide policy, an incontestability clause prevents the provider from invalidating coverage because of a misstatement by the insured after some time has passed. For example, a standard incontestability clause states that the contract won’t be voidable after two to three years because of a misstatement.

The contestability clause describes the circumstances around the death of the policyholder and is commonly applied in the first two years of the policy. During this time, insurers can deny claims for many reasons, such as performing an illegal act or suicide.

Life Insurance Suicide Clauses

When the contestability clause expires, the incontestability clause takes place. Once the incontestability is active, only serious infractions can be considered grounds for the claim’s denial. The type of infractions that can lead to a claim denial varies from company to company. There are, however, some exceptions to the incontestability clause in some cases, including:

  • Incorrect gender or age
  • Short-term contestability
  • Evidence of intentionally misleading or lying to the insurer
NOTE: In 2018, there were more than 48,000 deaths by suicide and 1.4 million suicide attempts, making it the 10th leading cause of death in the US.

How Do Suicide Clauses Work?

Some life insurance companies hesitate to give life insurance for suicidal death in concern of those with financial incentives to take their own lives. For that reason, many life insurance companies include a suicide clause or provision in their insurance policies.

As previously noted, insurance companies include a suicide clause in their policies, stating that they will not pay a death benefit if the insured person dies by suicide within the first two years of the coverage, known as the exclusion period. But when the exclusion period is over, the policy’s beneficiaries can obtain a death benefit if the insured person commits suicide after that time.

In some states—such as Missouri, Colorado, and North Dakota—the exclusion period is shorter. For example, after the suicide and life insurance policy has been in force for one year, the beneficiaries can receive a death benefit if the covered person dies by suicide.

If you make changes to the policy—such as converting the term policy to a whole life insurance policy or adding coverage—the exclusion period will restart upon the time of those changes.

The suicide provisions and the life insurance suicide payout may vary according to the type of coverage you own, as seen below:

Group Life Insurance

Most group life insurance policies or supplemental insurance policies (most commonly obtained via work) don’t have a suicide clause. Therefore, if an insured person commits suicide, their beneficiaries will typically receive the death benefit.

Term Life Insurance

With an individual term life insurance policy, beneficiaries can demand the death benefit after the exclusion period has ended. If the covered person dies after the death insurance policy has been in effect for more than one or two years, the beneficiaries can get the full benefit. But if the death occurs during the exclusion period, their beneficiaries may receive only the sum of premiums paid to date.

Whole Life Insurance

With one of the sought-after whole life insurance policies, the beneficiaries may receive the plan’s cash value and life insurance suicide payout, even if the insured person dies during the exclusion period. And if the exclusion period is over, the beneficiaries can get cash value and the full death benefit.

NOTE: According to LIMRA’s 2020 Insurance Barometer Study, 54% of all people in the US were covered by some life insurance.

Key Takeaways

Suicide is not typically covered in the two years of the insurance policy; it’s covered after those two years.
Most insurance companies include suicide clauses or provisions in their policies.
Typically, companies won’t pay a death benefit to beneficiaries if the policyholder commits suicide within the first two years.
Making changes to the policy will restart the period of the suicide exclusion life insurance.

How Does an Insurance Company Know If Someone Died by Suicide?

If a policyholder dies, their beneficiaries typically file a claim, and the insurance company asks for a death certificate. That certificate describes the cause of death and points out if the death was self-inflicted.

If the death certificate is doubtful or involves a questionable cause of death, the insurance company can require additional proof, such as a medical history examiner report, an autopsy report, an EMS report, etc.

Because the investigation of deaths by suicide takes more time than usual, receiving the average life insurance payout and the policy’s benefit might be prolonged. Even though the claim process can be time-consuming and complex, beneficiaries should not let that demoralize them from filing a claim. It’s possible to receive benefits that will help them financially to recover in some way from the tragedy.

NOTE: Some insurance policies would exclude coverage if the covered person died while committing a felony. And, according to a policy’s slayer rule, benefits aren’t typically paid out if a beneficiary murders the policyholder.

How Do Life Insurance Payouts Work for Suicide?

Before issuing life insurance and a suicidal death policy, the insurance company analyzes the physical and mental health of the client. This underwriting process includes a few questions regarding the client’s current and past medical conditions.

Such conditions as depression can help the insurance company determine the client’s risk of injury or death. While it probably won’t result in denial of coverage, proof of medication and treatment will help insurers be more comfortable insuring the client, despite pre-existing issues with mental health. If the client doesn’t disclose these conditions in advance, the company could have grounds to deny the average life insurance payout if the client’s death is self-inflicted.

Conclusion

You should know that the contestability period and the suicide clause are not the same. For example, even though the periods of time (and circumstances) often overlap, if the suicide results from an undisclosed pre-existing medical state, the suicide clause deals with self-harm. In contrast, the contestability period deals with fraud.

FAQ

Can you collect life insurance if someone kills themselves?

Typically, beneficiaries can collect the insurance if the covered person commits suicide. But most policies have a suicide clause for the first two years—insurance policies won’t cover a suicide that occurs during this period.

How does life insurance work in suicide?

First, does life insurance pay for suicidal death? Yes, but a suicide clause specifies that suicide isn’t typically covered in the first two years of insurance policy coverage.

Why do life insurance policies have suicide clauses?

Most insurance companies include a suicidal clause in their policies because they limit the payments of benefits.

ABOUT AUTHOR

I learned a lot about finance after working for a digital marketing company specializing in investing and trading stocks, forex, etc. After that, I got exposed to other verticals such as wealth management and personal finance, which further improved my understanding of the financial world.

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