Jeffrey Wade
The topic of medically assisted death and its implications for life insurance is a complex one, with legal, ethical, and financial considerations at play. In 2016, Canada legalised Medical Assistance in Dying (MAID), allowing eligible individuals with terminal illnesses to request aid from medical practitioners to end their lives. This legislation raised questions about the validity of life insurance policies for those choosing MAID, with concerns that it might be considered suicide and thus impact insurance payouts. However, the Canadian Life and Health Insurance Association clarified that MAID would not be deemed suicide, and insurers confirmed their willingness to pay out policies, treating MAID-related deaths similarly to natural deaths. While investigations may occur to ensure no misrepresentation, accurate and truthful information on applications means payouts should not be affected.
| Characteristics | Values |
|---|---|
| Does medically assisted death affect life insurance? | In Canada, medically assisted death is not considered suicide and does not affect life insurance. |
| How do insurance providers treat medically assisted death? | They treat it the same as a natural death and pay out the claim. |
| What if the policy is less than two years old? | Typically, insurers will not pay for a death by suicide if the policy is less than two years old. However, in Canada, insurance providers have agreed to lift this exemption for medically assisted deaths. |
| What if the policyholder had a history of mental illness? | If the policyholder had a history of depression or mental instability and did not report it, the insurer may decide not to pay the claim. |
| What if the policyholder had a terminal illness? | If the policyholder had a terminal illness and did not disclose it, the insurer may deny the claim. |
| What if there was misrepresentation? | If there was misrepresentation or false statements in the application, the insurer may deny the claim. |
| What if the policy specifically exempted the illness? | If the policy specifically exempted the illness for which the holder sought medically assisted death, the insurer may not pay the claim. |
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What You'll Learn
Medically assisted death is not suicide
In 2016, Medical Assistance in Dying (MAID) was legalized in Canada. MAID is a form of medically assisted death, in which a physician or nurse practitioner administers medication to a patient at their request, causing their death. Alternatively, the medical professional can prescribe medication for the patient to take themselves.
MAID is not considered suicide. Suicide is a desperate act of self-harm, while MAID is a legal, federally regulated end-of-life choice, driven by hope and autonomy. This distinction is important in the context of life insurance. Suicide is typically excluded from coverage in life insurance policies, particularly if it occurs within the first two years of the policy. However, because MAID is not considered suicide, life insurance providers in Canada treat medically assisted deaths the same as other deaths. This means that if an individual chooses MAID, their life insurance claim will be paid out as long as the policy has been in place for at least two years.
The Canadian Life and Health Insurance Association (CLHIA) has clarified that as long as the individual follows the legislated process for MAID, their death will not be considered suicide for life insurance purposes. This means that the health and legal conditions for MAID must be fulfilled, including having a grievous and irremediable medical condition in an advanced state of decline. Additionally, the insurer can challenge the claim if they find evidence of misrepresentation when the individual applied for coverage or if the individual died from an excluded condition.
It is important to note that the terminology used to describe MAID varies and can be a source of confusion. While some use the term "physician-assisted suicide" or "physician-assisted death", others avoid these terms due to the stigma associated with suicide and the potential for misunderstanding. Instead, they prefer terms like "assisted dying" or "medical assistance in dying", which emphasize the patient's choice and the role of the medical professional in providing a dignified and peaceful death.
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Life insurance companies will pay claims in full
In 2016, the Canadian Life and Health Insurance Association (CLHIA) stated that life insurance providers would treat medically-assisted deaths the same as other deaths. This means that life insurance companies will pay claims in full, as long as the policyholder provided accurate and truthful information on their application. This is because, in the case of medically-assisted deaths, the cause of death is not considered to be suicide.
However, it is important to note that insurance providers will likely investigate claims to ensure there was no misrepresentation of the policyholder's health at the time the policy was obtained. For example, if a policyholder had a history of depression or mental instability and did not report it, the insurer may decide not to pay the claim. Additionally, the insurer can still challenge a claim if the policyholder died from a condition that was specifically excluded when the policy was issued.
In Canada, the Vancouver Coastal Health's Assisted Dying Program is not aware of anyone being denied their life insurance due to having an assisted death. This suggests that life insurance companies are indeed paying claims in full in cases of medically-assisted death.
It is always recommended to confirm the specifics of your life insurance policy with your provider, as policies can vary and each case is unique.
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Suicide cases within two years of policy not paid
Suicide cases are treated differently from medically assisted deaths by life insurance companies. If a policyholder commits suicide within the first two years of the policy, the insurance company will not pay the death benefit to the beneficiaries and will only return the paid premiums. This exclusion period, also known as the contestability period, allows the insurer to deny the claim or investigate the death if it is considered suspicious. The clause is meant to prevent individuals from purchasing a policy immediately before taking their lives so that their loved ones can receive financial benefits.
After the exclusion period, the insurance company will pay out the death benefit regardless of the cause of death, including suicide. The policy will not be subject to any exclusions, and the beneficiaries will be able to claim the full death benefit.
It is important to note that the specific provisions of a life insurance policy can vary depending on the insurer and the location of the policyholder. For example, group life insurance through an employer or organization and military life insurance generally do not include a suicide clause, so the policy can pay out for suicidal death. Additionally, the contestability period can range from one to three years, depending on the insurer, but it is typically two years.
In all cases, it is essential to be honest and transparent on the life insurance application to avoid any delays or denials of claims. If there is any uncertainty about the coverage, it is advisable to speak to an advisor or insurance agent to get clarification.
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Misrepresentation of health can void policy
When applying for a life insurance policy, applicants are required to provide accurate and truthful information about their health, lifestyle, and other relevant details. However, a survey by Finder.com reveals that roughly 15% of Americans admit to lying on a life insurance application. This could be due to fear of having the application rejected or being placed in a higher-risk classification.
Instances of misrepresentation can have significant implications on the policy and the claims process. In the United States, an insurer can deny a claim even if the misrepresentation and the cause of death are completely unrelated. For example, if an applicant lies about their family history of chronic heart disease and subsequently dies of a heart attack, the insurer may deny the claim if they find evidence of misrepresentation.
In the case of Townsend v. Northwestern Mutual Life Insurance Co., Northwestern rescinded two life insurance policies based on material misrepresentations by the plaintiff's deceased husband. The husband had stated on his medical history questionnaire that he had not used cocaine in the last 10 years and died by suicide in April 2019. Following his death, Northwestern reviewed the claim and learned that he had previously been admitted to a mental health treatment facility for a suicide attempt and had used cocaine within the period addressed in the questionnaire. Based on this information, Northwestern denied the claim and rescinded the policies, stating that they would not have issued the policies if they had known about the prior drug use.
Another example is the case of Campbell v. Hartford Life & Accident Insurance Co. In this case, Gary Campbell answered "no" to a question about whether he had been diagnosed or treated for drug or alcohol abuse in the past five years. However, during the investigation following his death, Hartford learned that he had a prior history of alcohol abuse and a diagnosis of "alcohol dependence." The company denied the benefits and rescinded coverage, determining that Campbell's false answer was a material misrepresentation, and the policy would not have been issued if they had known about his alcohol abuse.
To avoid any issues with your life insurance policy, it is essential to be as thorough and accurate as possible on your application. Review it carefully before signing and submitting it to the insurance company. If your application contains misrepresentations, whether intentional or unintentional, it could put your life insurance benefit at risk.
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MAID does not affect pension or life insurance
Medical Assistance in Dying (MAID) is the name of Canada's assisted dying legislation. It refers to the administering of medications by a physician or nurse practitioner that, at the person's request, causes their death. It is important to note that MAID does not affect pension or life insurance.
Regarding life insurance, MAID will not be considered "suicide" as long as the legislated process is followed and health and legal conditions are fulfilled. This means that life insurance companies will typically pay out claims in full, regardless of how long the policy has been in place. This is in contrast to cases of suicide, where insurers will not pay for a death that occurs within the first two years of the policy and will only return the paid premiums.
The Canadian Life and Health Insurance Association (CLHIA) has stated that "member companies would not treat deaths resulting from MAID as a 'suicide' for policy purposes provided the legislated process has been followed." This means that as long as the person follows the legislated process for MAID, their death will not be considered suicide, and their life insurance policy should remain valid.
It is worth noting that life insurance companies may still investigate claims and will try to determine if any misrepresentations were made when obtaining the policy. For example, if a policyholder had a history of depression or mental instability and did not disclose it, the insurer may decide not to pay the claim.
Regarding pensions, the type of pension plan and its specific rules will determine what happens to it after the death of the pensioner. For example, if a retired person was married and elected a Joint and Survivor Pension payment form, their pension will be converted to a Survivor Pension upon their death, with the percentage determined at the point of retirement. On the other hand, if the retired person was not married at the time of death, the Pension Plan may offer a "Guarantee Period" on Single Life Pensions, guaranteeing a minimum number of payments to their beneficiary.
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Frequently asked questions
Medically assisted death is not considered suicide, and therefore does not affect life insurance. However, insurance providers will investigate claims to ensure there was no misrepresentation of the policyholder's health at the time the policy was obtained.
If medical information wasn’t required for a no-medical policy, failing to disclose it does not provide grounds for denying a life insurance claim after a medically assisted death.
If you have a terminal or serious illness, it can affect your ability to qualify for traditional life insurance. However, you may still be able to qualify for a no-medical life insurance policy, though these often come with higher premiums and lower coverage amounts.
