Will Life Insurance Cover Suicide?

Life insurance is a way to financially protect your loved ones after you die. It brings peace of mind, knowing that your loved ones will have financial support to cover things like mortgages, college tuition or everyday living expenses. “But sometimes situations around a death can be complicated too.” And one of the most sensitive issues is suicide.

A lot of people ask whether a life insurance policy will even pay if the cause of death was suicide. It’s a hard question, but an important one for anyone taking out insurance or for beneficiaries working through a claim. This piece will offer some transparency when it comes to how life insurance handles claims that result from suicide, including what the suicide clause is and what they can expect for their beneficiaries.

Understanding Life Insurance Policies

But over all, it was worth around $1 million, a belated discovery that by law would trigger an insurance payout to the assassin’s son. Policies can be primarily categorized into two types:

• Term Life Insurance: Does what its name implies (provides coverage for a certain “term” or period of time), such as 10, 20, or 30 years. If the insured dies while the policy is in effect, a death benefit will be paid to the beneficiaries. It’s often less expensive than other forms of life insurance.

• Whole Life Insurance: A type of life insurance that covers the insured for life as long as you pay premiums. It also accumulates a cash value the policyholder can borrow against or withdraw.

Both types of policy are intended to provide a tax free lump sum for the named beneficiaries when the insured person dies. This money is good for anything, and it would provide needed financial security in hard times.

The Suicide Clause in Life Insurance

Most life policies have a suicide clause. An example of this type is a provision that the policy will not pay the full death benefit in case of suicide by the insured (usually within two years from issue date), whose intention is to protect insurer from an adverse selection.

The usual waiting period for a suicide clause is two years from when the policy was issued, although it may vary by state and insurance company. There may be a one-year time limit in some states.

It is to combat insurance fraud that this clause is included. It deters people from buying a big policy with the hope of killing themselves soon thereafter, and collecting a monumental sum for their heirs. Insurers do need to guard against this kind of anti-selection, in which someone at high risk deliberately seeks coverage.

What Happens if Suicide Occurs Within the Clause Period?

If the insured commits suicide as defined in a suicide clause (typically within two years of the purchase of the policy), insurer will have grounds to deny to payout any benefits.

Rather than the full policy, the insurer will typically refund all premiums paid into the policy to that date. If a policyholder had paid $100 per month for 18 months prior to their death, the survivors would receive a refund of the $1,800 they had contributed but not the full death benefit (e.g., $500,000).

There are indeed incredibly (and I mean INCREDIBLY) few exceptions to the rule. It is a routine contract term which you would hope to be easy to satisfy in order to keep the insurer and the rest of the body of policyholders free from such chancers.

What Happens if Suicide Occurs After the Clause Period?

After the suicide clause period has elapsed (after a year or two), life insurance will typically pay the entire death benefit to your beneficiaries even if your death is due to suicide.

The process of the claims would be like filing any other claim. The heirs will have to provide the death certificate and fill up required claim forms. The files will be submitted to the insurance company and once it is satisfied that the documents are in order, they will disburse policy payment.

It’s worth noting that the insurance company will still do research on the cause of death, to verify that nothing was misrepresented on Cover.com’s initial application.

Factors Affecting Life Insurance Claims in Suicide Cases

Incidents Factors Affecting Life Insurance Payouts within a Suicide Claim Your insurance policy’s clauses will certainly direct the details your life insurer must think about before releasing benefit for assert related to suicide.

A suicide life insurance claim can be complicated by a number of different factors, even if the clause period has already expired.

• Misrepresentation or Fraud: If you lied on your application, particularly about any history of mental health issues, the insurance company could deny the claim for material misrepresentation. This is why being honest on your application is so important.
• Policy Terms And Conditions: Each policy is unique. It is important to read and understand the precise wording in your contract. Which would include the suicide clause and any other exclusions.
• Investigation: Insurers will always conduct an investigation of the death. They work in all types of cases, from drug overdose to an apparent crime scene. And it may take longer and more documentation to be satisfied that a death was accidental or intentional.

Case Study Example

Take “John,” for example, who bought a $1 million level term life insurance policy. He had a past history of depression but hadn’t reported it on his application.

• Scenario 1: John dies by suicide in month 18 months from the policy issue date. The insurance company looks into it and discovers he died within the two-year suicide clause window. The $1 million death benefit is denied and his beneficiaries are refunded the premiums he paid.
• Scenario 2: John’s suicide occurs three years after the policy was purchased. The suicide clause, time period is over. A few years down the line, John has a stroke and tries to claim on his policy. But when the insurer looks into his claim. They find out that he made false claims about his mental health on the application. The insurer might refuse payment on the claim due to fraudulent omissions. Which would leave his family without the death benefit.

This case emphasizes the significance of both the suicide clause length and the requirement for absolute honesty during application.

Mental Health and Your Life Insurance Policy

Seeking mental health help is a sign of strength and it should not be an obstacle in the way of ensuring the future prosperity for your family. Insurance companies are beginning to understand the necessity of mental care.

When you apply for a life insurance policy, you will be questioned about your mental and physical well-being. Transparency is so important. Your own history of mental illness or treatment may affect what you will pay for premiums, but it does not automatically disqualify you from being covered. An unmanaged condition is a bigger risk for insurers, than diagnosed and well-managed condition.

If you or someone you know is in distress, assistance can be found.

• National Suicide Prevention Lifeline: Call or text 988 anytime in the US and Canada.
• Crisis Text Line: Text HOME to 741741.
• The Trevor Project: 1-866-488-7386 for LGBTQ youth.

Ensure Your Loved Ones Are Protected

Suicide life insurance clauses are an important portion of financial planning, so you might want to know how they work. It enables you to have realistic expectations and to take the proper measures to protect your family.

The key takeaway here is: after a period of one to two years, most life insurance policies will cover suicide. To make sure your policy pays out the way you envision, fill out your application as honestly and accurately as possible, understand the terms of your policy and regularly review your coverage.

One of the greatest acts of love you can provide for your family is planning for the future. If you’re ready to take the next step in ensuring their financial health, we can help. Get a free life insurance quote now to find the coverage that’s right for you. I hope you share this to help others gain knowledge in this vital subject. And comments with questions are always welcome!