DOES A LIFE INSURANCE POLICY
COVER SUICIDE?

Whether your policy will payout in the event of suicide depends upon several factors. If the individual obtained free life insurance through their employer and the company paid for this life insurance then, yes. If the individual was insured under an individual policy plan that went into effect two years prior to death (depending on the state), then yes. If the individual was insured under coverage that they purchased through their employment and it went into effect more than two years prior (depending on the state), then yes.

However, life insurance policies typically have what is known as a ‘life insurance suicide clause’ and ‘incontestibility clause’. The ‘life insurance suicide clause’ and ‘incontestibility clause’ have different coverages within the suicide provisions, terms and conditions. At the time of purchase of the life insurance policy, the representative has the obligation to explain all clauses and policy conditions, as well as exclusions that may be applicable.

When taking out a life insurance policy the suicide clause needs to be fully understood. In the event of a suicide, the life insurance suicide clause can lead the insurance company to do one of three things:

Grant the full policy

Grant only the return of payment of the premium paid by the insured

Deny the claim altogether

The life insurance suicide clause is the provisions and terms addressed within the policy in the event of a suicide. Denial of payout to the beneficiary will occur if the death of a loved one takes place before the two-year provision. This gives the insurance company the ability to investigate the claim and determine whether the cause of death was intentional.

If the insurance company is able to gather the information that proves the death was intentional, then the policy can be negated and denied any payout to the beneficiary.

However, the life insurance suicide clause can differ based on the type of policy coverage. There are two different policies available. One is the individual life insurance policy, which is taken out by the individual themselves. Second, is the group life insurance policy, which is provided and paid for by the employer.

The incontestability clause deals with the insurance company’s ability to dispute or deny the life insurance policy claim within the first two years of the policy being in effect. During this process of investigation, the insurer will investigate the sudden death of your loved one and the circumstances in which the individual passed.

Circumstantial situations could consist of death during an illegal act, misrepresentation of information, or potential drug and alcohol abuse causes. If any such cases are found, then the insurer may deny the claim. Knowing the specifics of the terms and conditions is vital. Be sure to get all the questions clarified with your insurance agent.

Individual life insurance is when an individual purchases their own policy. There is a stipulation in regards to when it can be implemented. It will only pay forth its policy to the beneficiary if the death took place after a certain time period when the policy went into effect. This is typically after the first two years.

If a death occurs before the first two years, the individual life insurance policy will deny payment. The individual would have been made aware of such information by the insurance agent when purchasing. This is vital information that needs to be emphasized and clarified when purchasing the policy.

Such allotted time gives insurance companies time to ensure their policies were not purchased by an individual who had purposeful intentions to take their own life after obtaining a life insurance policy.

Although the individual life insurance policy will not be awarded, the insurance company will generally return the premium paid by the insured for the policy, minus the premium owed before the death to the beneficiary.

Another type of policy is a ‘whole life’ policy. This is lifelong coverage that includes an investment component (typically the policy’s cash value). With ‘whole life’ policies the value grows slowly and is tax-deferred. In this case, the premium would be subtracted from the policy and the remaining amount would be given to the beneficiary.

Group life insurance is a policy paid for by the employer. Unlike the individual life insurance policy, this policy does not have a suicide clause. This means that if your loved one passes away at any time, the policy would payout to the beneficiary with no issues.

However, in the situation that the employee purchases the company’s group life insurance, the policy will not be paid forth to the benefactor. The reasoning is that there is a suicide clause within this agreement that prevents this.

Although the policy will not be paid, the insurance company will return the premium that was paid to the beneficiary, much like the situation with the individual life insurance policy mentioned above. Withholding only the life insurance policy payout.

In today’s world, doctor-assisted suicide is becoming more accepted, but state law and insurance companies have not conformed to this new way of self-inflicted death, formally known as “death with dignity” or “right-to-die”. The suicide clause and the incontestability clause still apply to this situation.

Patients that are diagnosed with terminal illnesses are often faced with decisions that they would otherwise not face if they were healthy. With “death with dignity” or “right-to-die”, the patient is choosing to forgo medical treatment that may otherwise affect their quality of life in their remaining days. Such decisions are made with the understanding that not only does it affect them, but also their loved ones.

Considering all factors, it still falls under the category of suicide. Only in certain states have laws been passed for such doctor-assisted suicide. These states are: Oregon, Washington, California, Vermont, Pennsylvania, District of Columbia, Hawaii, Montana and Colorado.

Do life insurance policies cover doctor-assisted suicides within these states? The answer reverts back to the suicide clause and the incontestibility clause. If the medically induced suicide was completed before the two-year policy mark, then no. If the medically induced suicide was completed after the two-year policy mark, then yes. All situations will be investigated by the insurance company.

There are multiple scenarios of how suicide can take place. In the situation of accidental death, does the life insurance policy cover it? The factors will rely upon the information that was shared with the insurance company upon applying for the life insurance policy.

This information will be an important factor. This is why it is vital that upon taking out an insurance policy, the insured needs to be forthright. In the tragic event that an accidental death took place and it was deemed a suicide, having the factual information with the insurance company will play a key role in obtaining the policy payout.

If the applicant has a record of drug abuse, the type of drug and whether the individual suffers from a mental illness, will be investigated. Insurance companies are made aware of the risks during the application process.

When you make the choice to obtain life insurance for yourself or family members, you must understand that the insurance company will go through a thorough process. The reason insurance companies go through an exhaustive, comprehensive process is to determine how much of a risk the applicant is to insure. The applicant’s current health and health history is looked over. The mental health of the individual is considered as well.

How does mental health correlate with obtaining life insurance coverage? Mental health is linked to depression. Depression is one of the leading causes of suicide. This being a factor, it makes sense as to why insurance companies would require such information to be shared. Insurance companies want the assurance that the individual seeking life insurance is not purposefully seeking life insurance to commit insurance fraud.

Insurance fraud could be considered an issue when the insured commits suicide before the two-year incontestability clause takes course.

During the application process, you must answer questions in regards to your mental health. If you are currently experiencing depression, or have in the past, you will be expected to disclose when you were first diagnosed, the severity of the depression, as well as evidence of treatment (either therapy and/or medication). Such honesty will benefit you in the process of seeking life insurance policy coverage.

In order to prevent a denied life insurance claim, you should be completely forthright with all information. Yes, the fear of being rejected for life insurance coverage with one or several insurance companies holds a risk; however, in the unfortunate event that something does happen, your beneficiary’s claim is less likely to be rejected if you have been honest in your application.

There is a good chance that you will find an insurance company that will accept your application. Be sure to apply to several insurance companies.

Insurance companies will appreciate the honesty of the information that you share if you have had suicidal thoughts, attempted suicide, or have an issue of mental illness. Generally speaking, insurance companies will cover the risk.

The challenge one may run into would be if there had been multiple suicide attempts.

When you are applying for life insurance coverage you should have on hand, the following items:

With all the information provided, the insurance company will decide if they will cover you. If they move forward with this decision then they may or may not limit the amount of your life insurance policy. Another stipulation could consist of increasing rates based on medical history and lifestyle choices.

It is vital, to be honest when seeking life insurance policy coverage. You do not want to run the risk of your passing leaving your beneficiaries having to pay higher insurance premiums because of your failure to disclose information that causes them to deny your claim.

Insurance companies also have the option of withdrawing policy coverage if they find misinformation was shared with them upon the application process. Honesty pays with life insurance policy coverage.

In the unfortunate event that one needs to contest a denied life insurance claim, it’s important to understand why the insurance company may be denying a claim.

One factor may consist of the death of the insured occurring within the incontestability clause period (before the two year time period). In the wake of such events, the insurance company will either rely upon the police report or the medical examiners ruling of the cause of death.

On rare occasions, sometimes the insurance company will proceed with their own investigation if the cause of death is deemed suspicious. More often than not, the insurance claim will be denied to the beneficiary in these circumstances.

Insurance companies turn their investigative attention to the following list of items in order to make a conclusive decision.

Moving forward, if the beneficiary believes that the claim denial is not justified, obtaining proper legal representation will help. Typically the insurance company will settle with paying less than the policy amount.