Life Insurance And Assisted Suicide: What's The Verdict?

Physician-assisted suicide, also known as death with dignity or right-to-die, is currently legal in five US states: California, Colorado, Oregon, Washington, and Vermont. This allows people diagnosed with a terminal illness to make end-of-life decisions under certain circumstances. While life insurance policies typically include a suicide clause that prevents the insurer from paying out within the first one to three years of the policy, it is unclear whether this clause applies to assisted suicide. The answer may depend on the specific terms of the policy, the location of the policyholder, and other factors.

Suicide clauses

In most states, the exclusion period is two years. However, in states such as Colorado, Missouri, and North Dakota, the exclusion period is shorter, and beneficiaries can claim death benefits after the policy has been in force for a year. After the exclusion period ends, the policy's beneficiaries can receive a death benefit if the insured person dies by suicide.

Most life insurance policies won't pay out if the insured person commits suicide within the first 12 months of taking out the plan. However, if the insured person dies after the exclusion period has ended, the life insurance policy will pay out as it would for death from illness or other insured causes.

Suicide provisions

The purpose of suicide provisions is to protect insurance companies from financial risk by preventing individuals from taking out a policy with the intention of ending their lives soon after. It also prevents someone from obtaining a large policy and then taking their own life to get their family out of financial difficulties. After the exclusion period ends, most life insurance policies do cover suicide, and beneficiaries are entitled to receive the full death benefit.

It's important to note that different types of life insurance policies may have specific clauses and conditions that impact coverage. For example, group life insurance policies, often provided as employee benefits, usually include similar suicide clauses. Military-focused life insurance policies, such as 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, including suicide.

In the context of assisted suicide, it's worth noting that five states in the US (California, Colorado, Oregon, Washington, and Vermont) legally allow assisted suicide for individuals with terminal illnesses. In these cases, life insurance policies may still be invalidated if the insured person takes out the policy shortly before their assisted death. However, if the policy has been in force for longer than the exclusion period, the death benefit will likely be paid out.

Exclusion periods

The exclusion period typically lasts for the first one to three years of the policy being in force, with two years being the most common timeframe. During this period, if the insured person dies by suicide, the insurance company will not pay out the death benefit to the beneficiaries. Instead, the insurance company may refund the premiums paid on the policy.

The purpose of the exclusion period is to prevent people from having a financial incentive to take their own lives. It aims to safeguard against individuals obtaining large policies and then taking their lives so that their families can receive financial benefits.

In the context of assisted suicide, the same rule applies. If you live in a state where assisted suicide is legal, you must pass the exclusion period before your beneficiaries can claim death benefits.

It is important to note that changing a life insurance policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period. Therefore, if you switch policies, the suicide clause and exclusion period restart, even if you purchase the new policy from the same company.

Incontestability clauses

An incontestability clause is a provision within a life insurance policy that prevents the insurer from voiding the policy after a certain period due to misstatements in the application. This clause typically comes into effect after an initial contestability period, which is usually two years after the policy start date. During the contestability period, the insurance company can deny a claim if it finds that the policyholder included false information or withheld relevant information. After the contestability period ends, the insurance company can only deny a claim for reasons outlined in the incontestability clause, such as fraud or non-payment of premiums.

The incontestability clause is important because it provides added protection for beneficiaries by making it harder for insurance companies to deny claims. This clause was introduced in the 19th century due to concerns that insurance companies were unfairly denying death benefits based on minor misstatements in applications. Today, it ensures that insurance companies conduct thorough due diligence during the underwriting period and provides peace of mind for policyholders.

It's worth noting that the incontestability clause covers more than just suicide. It applies to any situation where the insurance company might deny a claim due to false or incomplete information in the application. However, if an applicant knowingly provides false information about their health history or mental health issues, the insurance company can investigate and deny a claim at any time, even outside the contestability period.

When purchasing life insurance, it's essential to carefully review all the documents, including the incontestability clause, to understand your rights and protections under the policy. If you have any questions, it's recommended to seek guidance from a licensed insurance expert.

Death benefits

During the exclusion period, if the policyholder dies by suicide, the insurer may deny the death benefit or only refund the premiums paid. However, after this exclusion period, most life insurance policies do cover suicide, and beneficiaries are 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.

In the case of group life insurance, which is often provided as an employee benefit, there is usually no suicide clause. Therefore, if a covered person dies by suicide, their beneficiaries will typically receive the death benefit. For whole life insurance policies, beneficiaries may receive the plan's cash value even if the insured dies during the exclusion period. Once the exclusion period ends, beneficiaries can receive the full death benefit and cash value.

In the context of assisted suicide, it is important to note that five states in the US (California, Colorado, Oregon, Washington, and Vermont) legally allow it. In these states, if a person is terminally ill and chooses assisted suicide, it could still be deemed a suicide by the life insurance provider if it occurs during the exclusionary period, resulting in the denial of death benefits. However, after the exclusion period, the life insurance policy will typically pay out the death benefit to the beneficiaries.

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