Life Insurance And Suicide: What's Covered?

Life insurance policies typically include a suicide clause that limits the payment of benefits in the event of suicide. This clause is designed to prevent people from taking out life insurance with the intention of committing suicide and leaving a large payout to their beneficiaries. Most policies will not pay a death benefit if the policyholder commits suicide within the first one to two years, known as the exclusion period. After this period, the policy's beneficiaries can receive a death benefit if the insured person dies by suicide. Group life insurance policies, often obtained through an employer, do not usually have a suicide clause and will pay out benefits regardless of when the policyholder dies by suicide.

Life insurance policies often include a suicide clause

The suicide clause typically lasts for the first two years of the policy, known as the exclusion period. During this time, the insurance company will not pay a death benefit if the policyholder commits suicide. Instead, the beneficiary will receive a refund of any premiums paid and, in some cases, the cash value from a permanent insurance policy. After the exclusion period ends, the policy's beneficiaries can receive the full death benefit if the insured person dies by suicide.

The contestability clause is another important provision in life insurance policies. This clause allows the insurance company to investigate and deny claims during the first two years of the policy for various reasons, including suicide. The contestability clause is broader than the suicide clause and addresses other events, such as dying during an illegal act.

It is worth noting that changing a policy or replacing it with another company can reset the clock on both the contestability and suicide clauses, starting the exclusion period over again. This is an important consideration when making changes to an existing life insurance policy.

Group life insurance, often obtained through an employer, typically does not have a suicide clause. In these cases, beneficiaries will usually receive the death benefit regardless of when the insured person dies by suicide. Similarly, life insurance for military personnel and veterans through the Veterans Affairs program does not include a suicide clause and provides full coverage for suicide.

Suicide clauses typically last for two years

Suicide clauses typically last for one to two years, depending on the insurer and state regulations. During this exclusion period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout. This period is also known as the suicide exclusion period or the contestability period.

The suicide clause is included in life insurance policies to prevent an individual from taking out a policy with the intention of ending their life shortly afterward. The clause protects the insurance company from financial risk and ensures that beneficiaries will not receive financial benefits if the policyholder dies by suicide within the exclusion period.

The duration of the suicide clause can vary, with most states enforcing a standard two-year period. However, some states, like Missouri, Colorado, and North Dakota, have shorter periods of one year.

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. 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.

It is important to note that changing life insurance policies or making changes to an existing policy can restart the suicide exclusion period. This means that even if the original policy's exclusion period has ended, switching to a new policy or making changes to the current one will trigger a new waiting period during which claims for suicide may be denied.

Suicide clauses can be reset by changing policies

The exclusion period is typically the first one to two years of the policy, during which the insurance company will not pay a death benefit if the policyholder dies by suicide. After this initial period, the policy will generally cover suicide, and the beneficiaries will receive the full death benefit. However, if changes are made to the policy during this time, such as adding coverage or converting to a different type of policy, the exclusion period will start over.

It's important to note that not all life insurance policies have a suicide clause. Group life insurance policies, often obtained through an employer, usually do not have a suicide clause. In these cases, beneficiaries will typically receive the death benefit even if the policyholder dies by suicide within the first two years.

When it comes to individual life insurance policies, it's crucial to be transparent about any mental health issues or previous suicide attempts when applying. Failing to disclose this information could result in the denial of a claim or cancellation of the policy. It's also important to carefully review the terms and conditions of your life insurance policy to understand the specific clauses and conditions that may impact your coverage.

Group life insurance policies often don't include a suicide clause

Life insurance policies often include a "suicide clause", which typically states that if the policyholder dies by suicide within a certain period after the policy is issued, the insurer may deny the death benefit or only return the premiums paid. This period is known as the "exclusion period" and usually lasts for the first one to two years after the policy is issued. The suicide clause is intended to prevent people from taking out a policy with the intention of ending their lives shortly afterward, thereby providing financial benefits to their loved ones.

However, group life insurance policies, often provided as part of an employee benefits package, differ in this regard. Unlike most individual life insurance policies, many group life insurance policies do not have a suicide clause. This means that if a covered person dies by suicide, their beneficiaries will typically receive the death benefit. This is because group life insurance policies are usually entirely paid for by an employer, and thus do not carry the same risk of financial incentive for the policyholder to take their own life.

It is important to note that supplemental life insurance purchased through an employer usually includes a standard suicide clause and contestability period. The contestability period, which is separate from the suicide clause, allows the insurer to deny a claim if the insured dies during this period and the insurer finds undisclosed health conditions or other discrepancies in the policy's application. This period typically lasts for the first two years after the policy is activated.

Contestability clauses allow insurers to deny a claim during the contestability period

Life insurance policies often include a contestability clause, which allows the insurer to investigate claims and deny a death claim during the first two years of the policy if they find evidence of fraud or misrepresentation. This is known as the contestability period. The clause helps protect the insurance company from fraud, as it is statistically unlikely that the policyholder will die during the first two years of the policy. It also allows the insurer to confirm that the policyholder did not withhold or lie about any health or lifestyle-related information during the application process.

The contestability period usually lasts for two years, though some sources state it can be up to three years. During this time, the insurance company can deny a claim for various reasons. For example, if the policyholder dies by suicide during this period, the company will investigate the circumstances of the death, and the claim may be denied. The insurance company may request additional documentation, such as an autopsy report, a medical examiner's report, an EMS report, or the person's medical records. If the death is ruled a suicide, the policy will be negated, and the beneficiary's claim will be denied.

The contestability period can restart if the policy is changed or reinstated after a lapse. For example, if a term life insurance policy is converted to a whole life insurance policy, the contestability period will start over. However, if the policy is only converted without any changes, there will be no new contestability period.

It is important to note that group life insurance, such as insurance obtained through an employer, may cover suicide differently than individual life insurance. Group life insurance that is fully paid for by an employer will generally cover suicide with no restrictions during the first two years. On the other hand, supplemental life insurance purchased from an employer will likely include a suicide clause or contestability period.

Frequently asked questions