Suicide And Life Insurance: What Cover Does My Dad Have?

If you're wondering whether your dad's life insurance covers suicide, the answer depends on several factors, including the type of policy he has, the specific terms and conditions, and the timing. Many life insurance policies include what is known as a suicide clause, which means that if the policyholder dies by suicide within a certain period, often the first two years, after the policy is issued, the insurance company may deny the death benefit or only refund the premiums paid. This clause is designed to prevent individuals from taking out a policy with the intention of ending their lives soon after so that their loved ones can receive financial benefits. However, after this exclusion period, most life insurance policies do cover suicide, and beneficiaries would receive the full death benefit. It's also important to note that certain types of life insurance, such as military life insurance or group life insurance through an employer, may not include a suicide clause and, therefore, treat suicide differently.

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), are unique in that they typically 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, their beneficiaries will still receive the death benefit. There are no exclusions that apply to SGLI or VGLI coverage.

Group life insurance policies, often provided as part of an employee benefits package, 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, the death benefit may not be paid. However, after this period, group life insurance generally does cover suicide.

It is important to note that supplemental life insurance purchased through an employer usually has a standard suicide clause and contestability period. In contrast, if group life insurance is entirely paid for by an employer, it will generally cover suicide with no restrictions during the first two years.

Suicide clause

A suicide clause in a life insurance policy is a provision that limits the payment of benefits in the event of the policyholder's suicide. This clause is designed to protect insurance companies from financial risk and prevent individuals from taking out a policy with the intention of ending their lives soon after.

The suicide clause typically applies during an exclusion period, which is usually the first one to two years after the policy is issued. During this exclusion period, if the policyholder dies by suicide, the insurance company may deny the death benefit or limit the payout to the return of premiums paid. After the exclusion period ends, the life insurance policy generally covers suicide, and the beneficiaries will receive the full death benefit.

The duration of the suicide clause can vary depending on the insurer and state regulations. While most states enforce a standard two-year exclusion period, some states, like Missouri, Colorado, and North Dakota, have shorter periods of one year.

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 an employee benefit, typically include a suicide clause similar to those found in individual life insurance policies. On the other hand, military-focused life insurance policies may not have a suicide clause and will pay out the death benefit regardless of the cause of death.

Understanding the suicide clause in a life insurance policy is crucial, as it directly affects whether beneficiaries will receive the intended financial support in the event of the policyholder's suicide.

Contestability period

The contestability period is a clause included in all life insurance policies that allows the insurer to review the application for incorrect information. This period usually lasts for the first two years after the policy is issued, but can vary by insurer. During this time, the insurance company can deny a death claim if they find evidence of fraud or misrepresentation. For example, if the insured died in a car accident but had failed to disclose a history of alcohol abuse, the life insurance company can deny the claim.

The contestability period is separate from the suicide clause, which typically lasts for one to three years, depending on the insurer, but is usually two years. The suicide clause states that the insurer won't pay out to beneficiaries if the insured's death was due to self-inflicted injury within this period. If the insured dies by suicide after the suicide clause has expired, the insurer will pay the death benefit.

If you are a beneficiary and the insured has died within the contestability period, you may experience a delay in receiving the benefit payout as the insurance company will need to investigate the claim.

Incontestability clause

An incontestability clause is a provision in most life insurance policies that prevents the provider from voiding coverage due to a misstatement by the insured after a specific amount of time has passed. Typically, this period is two years, but it can also be three years.

The incontestability clause is one of the strongest protections for a policyholder or beneficiary. It ensures that the insurance provider cannot deny a claim based on errors or omissions in the application after the initial contestability period, except in certain cases of fraud. This clause is intended to protect the insured from financial firms that may try to avoid paying benefits in the event of a claim.

There are three common exceptions to the incontestability clause:

• Misstating age or gender: In most states, if the insured person misstates their age or gender when applying for life insurance, the insurance company may not void the policy but can adjust the death benefits to reflect the policyholder's true age.
• Policyholder passes away during the contestability period: Some states allow insurance companies to include a provision stating that the contestability period must be completed within the lifetime of the insured. In this case, the insurance company can refuse to pay benefits if the policyholder was very unwell when they applied for coverage and died before the contestability period ended.
• Deliberate fraud: Some states also allow the insurance company to void a policy if deliberate fraud is proven.

Exclusions and denials

Life insurance policies typically 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. This period is known as the exclusion period and typically lasts for the first one to two years of the policy, but can be as long as three years. The clause is intended to prevent individuals from taking out a policy with the intention of ending their lives soon after so that their loved ones can receive financial benefits.

During the exclusion period, if the policyholder dies by suicide, the insurer may deny the death benefit or only refund the premiums paid up to that point. Some policies may also subtract loan amounts from any death benefit payout on permanent policies.

After the exclusion period ends, 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.

It is important to note that changing a policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period.

In the case of group life insurance, which is often provided as part of an employee benefits package, suicide clauses may not be included. In these cases, the policy can pay out for suicidal death, but each plan can differ. Supplemental life insurance purchased through an employer usually has a standard suicide clause and contestability period.

If a claim is denied due to suicide, it is important to understand the insurer's reasoning and the steps that can be taken to challenge the decision. This may include reviewing the insurer's denial letter, gathering relevant documentation, and understanding your rights under state laws. Consulting with an experienced attorney or insurance professional can also help bolster your efforts to secure the benefits owed.

Frequently asked questions