Jane Dotson
Life insurance is intended to provide financial support for loved ones after the policyholder's passing. However, the question of whether life insurance covers suicide is delicate and often misunderstood. While it's challenging to consider, understanding how your life insurance policy handles such situations is crucial for ensuring your loved ones are protected. The coverage of suicide in life insurance policies varies, and it's essential to carefully review the specific terms and conditions of your policy.
| Characteristics | Values |
|---|---|
| Suicide clause | 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. |
| Time period | Typically, the time period for the suicide clause is two years, but it can range from one to three years. |
| Payout | If there is no suicide clause, or the clause is no longer in effect, the policy may pay out for suicidal death if the insurer finds no other reasons to contest a claim. |
| Group life insurance | Group life insurance through an employer or organization treats suicide differently and generally does not include a suicide clause, so the policy can pay out for suicidal death. |
| Contestability period | A contestability period is separate from the suicide clause and typically lasts two years. During this time, the insurer can deny a claim if they find undisclosed health conditions or other discrepancies in the policy's application. |
What You'll Learn
Military and group life insurance policies
Military life insurance policies, such as those offered by Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI), typically provide coverage for suicide. These policies are unique in that they pay out the death benefit to the insured's beneficiaries regardless of the cause of death. This means that even if the insured dies by suicide or from an act of war, their beneficiaries will still receive the death benefit.
VGLI and SGLI policies do not include a contestability period or suicide clause, which are common in other life insurance policies. A contestability period, typically lasting two years, allows the insurance company to contest or deny a claim for various reasons, including suicide. A suicide clause gives insurance companies the ability to investigate claims and deny coverage if the policyholder intentionally caused their death.
While military life insurance policies generally cover suicide, there may be exceptions. For example, SGLI coverage may be forfeited if the insured member is found guilty of mutiny, treason, spying, or desertion, or refuses to perform service in the Armed Forces due to conscientious objections.
Group life insurance policies, on the other hand, usually include similar suicide clauses to those found in individual life insurance policies. If the suicide occurs within the exclusion period, typically the first two years after the policy is issued, the death benefit may not be paid. However, after this exclusion period, group life insurance generally covers suicide.
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Suicide clause
A life insurance suicide clause is a critical detail that can have significant implications for beneficiaries. This clause applies for the first one to two years after a policy is issued, depending on the insurer and state regulations. During this period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout. Instead, they might only return the premiums paid up to that point.
The suicide clause is intended to protect the insurance company from financial risk. It prevents an individual from taking out a policy with the intention of ending their life shortly afterward. The exact duration of the suicide clause can vary. While most states enforce a standard two-year period, some, like Missouri, Colorado, and North Dakota, have shorter periods of one year.
It is beneficial for policyholders to be aware of this clause because it directly affects whether their beneficiaries will receive the intended financial support. After this exclusion period ends, the life insurance policy generally covers suicide, ensuring the beneficiaries receive the full death benefit as outlined in the policy.
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Incontestability clause
An incontestability clause is a provision in a life or disability insurance policy that prevents the insurance company from canceling the policy based on misstatements in the policy application after the insurance has been in effect for a certain period, usually two years. This clause is one of the strongest protections for a policyholder or beneficiary. While many other legal rules for insurance favour the insurance companies, this rule is notably and strongly on the side of the consumer.
The incontestability clause in life insurance policies is designed to prevent insurance companies from ending coverage due to a misstatement by the insured after several years have passed. This provision benefits the insured, but it cannot protect against outright fraud. Lying to an insurance company with the intention to deceive can result in the cancellation of coverage or even criminal charges.
The incontestability clause was introduced by reputable insurance companies in the late 1800s to build consumer trust and clean up the industry's image. By promising to pay full benefits after the policy has been in place for two years, even if there were errors in the original application, insurance companies tried to assure customers. This effort was successful, and early in the 20th century, state governments began to pass laws requiring the incontestability clause. Today, most states require the inclusion of such clauses in insurance policies, and almost all life insurance policies contain this provision in some form.
The clock starts on the contestability period as soon as a life insurance policy is purchased. After two years, if the insurance company hasn't found an error in the original application, benefits are assured. Even within that two-year period, it is not easy for the company to rescind a policy. Under most state laws, the insurance company must file a suit in court to nullify a contract; sending a notice to the policyholder is not enough.
There are a few exceptions to the incontestability clause. Firstly, misstating age or gender permits the insurance company, in most states, to adjust death benefits to reflect the policyholder's true status. Secondly, a life insurance company can refuse to pay benefits if a policyholder was so unwell when they applied for coverage that they died before the contestability period was over. Lastly, in some states, an insurer can void a policy if deliberate fraud is proven.
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Contestability period
The contestability period is a clause included in most life insurance policies that allows the insurer to review the policyholder's application for any incorrect information, discrepancies, or undisclosed health conditions. This period typically lasts two years from the date the policy is issued, but can be as short as one year in some states. During this time, the insurance company can deny a death claim if they find evidence of fraud or misrepresentation. For example, if the policyholder had concealed a depression diagnosis, the insurance company could deny or reduce the amount the beneficiary receives.
The contestability period exists to deter fraud and allow insurers to thoroughly vet applications, as well as to control the cost of insurance due to misrepresented claims. It is important to note that the insurance company can only deny a claim if the missing information would have caused the application to be denied or would have resulted in higher premiums. If the latter is the case, the difference in premiums will be taken from the death benefit amount, and the beneficiary will receive the remaining balance.
The contestability period is separate from the suicide clause, which prevents the insurer from paying out the claim if the insured's death was due to self-inflicted injury within a certain period, typically two years, from the start of the policy. If the insured dies by suicide after the suicide clause has expired, the insurer will pay the death benefit.
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Getting life insurance with a history of attempted suicide
If you have a history of attempted suicide, it can be more challenging to secure life insurance, but it's not impossible. Here are some key things to know and consider when seeking coverage:
Table Ratings and Flat Extras
Insurers will evaluate your risk based on your medical and personal history, including mental health. If you have a history of attempted suicide, this will likely result in higher premiums due to the increased risk perception. This can come in the form of table ratings or flat extras. Table ratings are extra costs added to your standard premium, while flat extras are specific dollar amounts added to your premium to account for the insurer's perceived risk.
Time Since the Attempt
The time that has passed since your suicide attempt is a crucial factor. Insurers look for stability and improvement in your mental health over several years. The more time that has passed since your attempt, and the more stable your mental health has been during that time, the better your chances of obtaining coverage.
Current Mental Health Status
Insurers will also consider your current mental health status. If you have been stable and treatment-free for an extended period, this can work in your favour. It demonstrates progress and a lower risk in the eyes of the insurer.
Specialized Insurers
Working with an insurance professional who specializes in high-risk cases can be beneficial. They will have the expertise and knowledge to guide you towards the right coverage options and improve your chances of finding suitable insurance.
Be Transparent
When applying for life insurance, it's essential to be transparent about your history. Failing to disclose information can be considered fraud and may result in future claims being denied. Be honest about your past struggles, and provide any relevant medical records or documentation that can support your current mental health status.
Group Life Insurance
If you are employed, consider taking advantage of group life insurance offered by your employer. These policies often do not include a suicide clause and may provide coverage for suicidal death. However, it's important to carefully review the specific plan's details, as supplemental life insurance through an employer usually has a standard suicide clause.
Military Life Insurance
If you have served or are currently serving in the military, you may be eligible for military-focused life insurance policies. These 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.
Seek Support
Finally, remember that help is always available if you or someone you know is struggling with suicidal thoughts. Reach out to trusted professionals and organizations, such as the National Suicide Prevention Lifeline or similar resources. These services can provide valuable support and guidance during difficult times.
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Frequently asked questions
Most life insurance policies cover suicide, but there are some important exceptions. If the insured dies by suicide within the first two years of the policy, the death benefit is likely to be denied or limited to a return of premiums paid. This is known as the suicide clause. After the exclusionary period, life insurance will typically pay for suicidal death just as it would for death from any other insurable cause.
A suicide clause typically applies for the first one to two years after a policy is issued, during which time the insurer may limit or deny the death benefit payout if the policyholder dies by suicide. This clause is intended to protect the insurance company from financial risk by preventing an individual from taking out a policy with the intention of ending their life shortly afterward.
If your life insurance claim is denied, it’s helpful to understand the insurer’s reasoning and the steps you can take to challenge the decision. Denials may occur if the death falls within the policy’s suicide exclusion period. To contest a denial, carefully review the insurer’s denial letter and gather any relevant documentation, such as the insured’s medical records or investigative reports. You may also consider consulting an experienced attorney or insurance professional to help you reverse the denial and secure the benefits owed to you.
