Life Insurance And Suicide: What's Covered And What's Not

Life insurance policies typically include a suicide clause, which prevents the insurer from paying out to beneficiaries if the insured's death was due to suicide within a specified period, usually the first two years of the policy. This clause aims to prevent individuals from purchasing a policy with the intention of ending their lives soon after so that their loved ones can receive financial benefits. After this exclusion period, most life insurance policies do cover suicide, and beneficiaries are entitled to receive the full death benefit. However, there may be other factors and conditions that impact whether life insurance pays out for suicide, and different types of policies may have specific clauses that affect coverage in these circumstances.

Military and group life insurance policies

Military and veterans' life insurance policies typically do not include a suicide clause, meaning they will pay out to beneficiaries in the event of a suicide. This is the case even within the first two years of the policy.

Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI) are two examples of military life insurance policies that pay out the death benefit to beneficiaries regardless of the cause of death. This means that even if the insured dies from suicide or an act of war, their beneficiaries will still receive the death benefit.

Group life insurance policies, often provided as part of an employee benefits package, are also exempt from suicide clauses. However, supplemental life insurance purchased through an employer usually includes a standard suicide clause and contestability period.

It is important to note that the absence of a suicide clause in military and group life insurance policies does not guarantee automatic payout in the event of suicide. The insurer may still investigate the claim and deny it if they find undisclosed health conditions or discrepancies in the policy application.

Suicide clause and its implications

A suicide clause in a life insurance policy is a critical aspect that can significantly impact the benefits received by beneficiaries. This clause is typically applicable during the initial one to three years after the policy is issued, depending on the insurer and state regulations. For instance, most states enforce a standard two-year period, while some, like North Dakota, have a shorter one-year period. During this exclusionary period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout, opting instead to refund the premiums paid.

The primary purpose of the suicide clause is to safeguard the insurance company from financial risk by deterring individuals from purchasing a policy with the intention of committing suicide soon after, thereby ensuring their loved ones receive financial benefits. This clause directly affects whether beneficiaries will receive the intended financial support, as the insurance company may deny the claim if the policyholder's death by suicide falls within the specified time frame.

After the exclusion period ends, the life insurance policy generally covers suicide, and beneficiaries are entitled to receive the full death benefit as outlined in the policy. At this point, the insurance company is required to pay the full death benefit, regardless of whether the insured's death was premeditated or not, provided no other terms in the policy have been violated.

It is important to note that certain types of life insurance policies, such as military-focused life insurance plans and group life insurance policies, often do not include a suicide clause. As a result, these policies typically pay out the death benefit to the insured's beneficiaries, regardless of the cause of death, including suicide.

In addition to the suicide clause, life insurance policies also contain an incontestability clause, which becomes active after the policy has been in force for a specific duration, usually two years. Once this period ends, the insurer cannot deny a claim based on errors or omissions in the application, except in cases of fraud or misrepresentation. This clause provides added security for policyholders and their beneficiaries, ensuring that their coverage cannot be easily contested after the initial period.

Life insurance payouts for suicide

Suicide Clauses

Many life insurance policies include a "suicide clause," which states that if the policyholder dies by suicide within a certain period, usually one to three years, but typically two years, from the start of the policy, the insurer may deny the death benefit or only return the premiums paid. This clause is intended to protect the insurance company from financial risk by preventing individuals from taking out a policy with the intention of ending their lives soon after.

However, after this exclusion period, most life insurance policies do cover suicide, and beneficiaries would be entitled to receive the full death benefit. If a policy does not include a suicide exclusion clause, the insurance company is required to pay the full death benefit if the insured dies by suicide, regardless of premeditation.

Types of Life Insurance Policies

Military Life Insurance

Military-focused life insurance policies, like those offered by Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI), typically pay out the death benefit regardless of the cause of death. This means that even if the insured dies from an act of war or by suicide, their life insurance policy may still pay out.

Accidental Death Insurance Policy

Whether or not accidental death is covered by a life insurance provider depends on the circumstances of the death and the information disclosed by the insured when applying for the policy. For example, if the insured dies from a prescription drug overdose but disclosed their prescription drug use to their insurance provider when applying, the beneficiaries may still receive the death benefit. However, death by illegal drug overdose is typically not covered.

Group Life Insurance

Group life insurance policies, often provided as an employee benefit, usually include similar suicide clauses to those found in individual life insurance policies. If suicide occurs within the exclusion period, the death benefit may not be paid. However, after this period, group life insurance generally covers suicide.

Traditional Life Insurance Policy

Traditional life insurance policies, including term and permanent life insurance, typically contain a suicide clause that applies for a specific period. After this period expires, the policy generally covers suicide, and the death benefit is paid to the beneficiaries.

Switching Policies

It's important to note that switching life insurance policies restarts the suicide clause and contestability period, even if the new policy is purchased from the same company.

Denial of life insurance claims

Most life insurance policies include a "suicide clause" that prevents the insurer from paying out the claim if the insured's death was due to self-inflicted injury within a certain period from the start of the policy, typically one to three years, but usually two. This clause is meant to prevent someone from purchasing a policy with the intention of ending their life shortly afterward so that their beneficiaries can receive a payout. If the insured commits suicide during this timeframe, the beneficiary will usually be reimbursed for premiums but will not be awarded the death benefit.

However, there are situations in which a life insurance claim for suicide may be denied even if the insured's death occurs outside of the exclusion period. For example, if the insured failed to disclose relevant information at the time of purchasing the policy, such as risky behaviours, mental health history, or diagnosis of depression, the claim can still be denied.

In cases where suicide is disputed, the insurance company has the burden of proof to demonstrate that the insured intentionally caused their own death. They may launch their own investigation and consider various types of evidence, including the death certificate, testimony from friends and family, medical and mental health records, evidence of drug or alcohol abuse, and any suicide notes.

If a life insurance claim is denied, particularly in cases of suicide, it is important to understand the insurer's reasoning and the steps that can be taken to challenge the decision. Consulting with an experienced attorney or insurance professional can help bolster your efforts to reverse the denial and secure the benefits owed.

Life insurance with a history of attempted suicide

If you have a history of attempted suicide, it is still possible to obtain life insurance coverage, but there may be challenges and higher costs involved. Here are some key points to consider:

Underwriting and Risk Assessment: Your application for life insurance will likely go through a manual underwriting process, where the insurer will assess your risk level, premium cost, and whether to accept or decline your application. The outcome will depend on your individual circumstances, including the time passed since the attempt and your current mental health status.

Time Since Attempt: The time elapsed since your suicide attempt is a critical factor. Insurers look for stability in your mental health over several years. The more recent the attempt, the riskier you may appear to the insurer, potentially resulting in higher premiums or even a declined application.

Table Ratings and Flat Extras: Insurers may apply table ratings, which are extra costs added to your standard premium based on their assessment of your risk level. Alternatively, they may add flat extras, which are specific dollar amounts charged on top of your premium to cover the perceived risk of insuring someone with a history of attempted suicide. These additional charges may be temporary or permanent.

Specialized Insurers: Working with an insurance professional who specializes in high-risk cases can improve your chances of finding suitable coverage. They can guide you through the process and help you navigate the options available.

Mental Health Status: If you have achieved stability and have been treatment-free for a period, this can positively influence the insurer's decision. Demonstrating effective management of your mental health may result in more favourable terms for your coverage.

Disclosure of Mental Health History: It is crucial to be honest and accurate when disclosing your mental health history during the life insurance application process. Nondisclosure or misrepresentation of any physical or mental health issues may invalidate your policy, leading to denied claims in the future.

Support Resources: If you or someone you know is struggling with suicidal thoughts, there are resources available to provide support and guidance. These include the National Suicide Prevention Lifeline (988), Crisis Text Line (text HOME to 741741), and The Trevor Project (1-866-488-7386), among others.

It's important to carefully review the terms and conditions of different life insurance policies and seek specialised advice to find the right coverage for your circumstances.

Frequently asked questions