Suicide And Life Insurance: India's Coverage Complexities

Life insurance is a financial safety net for families in the event of the policyholder's death. But what happens when the policyholder dies by suicide? Does life insurance cover suicide in India?

The answer is yes, but there are conditions. Most life insurance policies in India include a suicide clause, which states that if the policyholder dies by suicide within a certain period, usually 12 months to two years, of the policy being issued or revived, the insurer may deny the death benefit or pay only a percentage of the premiums paid. This is to protect insurance companies from fraud and financial risk. After this exclusion period, most life insurance policies do cover suicide, and beneficiaries receive the full death benefit.

The Insurance Regulatory and Development Authority of India (IRDAI) amended the suicide clause in 2014. For policies issued after January 1, 2014, beneficiaries will receive at least 80% of the premiums paid if the policyholder dies by suicide within the first 12 months. This provision ensures that families suffering from the loss of a loved one receive some financial support.

Life insurance policies that cover suicide

Life insurance policies are designed to protect the financial security of families in the event of an unexpected death. In India, life insurance pays out to beneficiaries in the case of the policyholder's suicidal death. However, there are specific provisions and conditions related to these types of claims.

Types of Life Insurance Plans That Provide Suicide Coverage

The suicidal death benefit is generally applicable to all types of life insurance policies, such as savings plans, wealth plans, and term insurance plans, that include a life cover component. The scope of the death benefit provided may vary depending on the specific plan.

Old and Current Provisions for Suicide Coverage in India

In India, the Insurance Regulatory and Development Authority (IRDAI) introduced changes to the provisions regarding suicide claims in 2014. For life insurance policies purchased before January 1, 2014, there is no death benefit payable in the event of suicide during the first 12 months of the policy. This provision was implemented to prevent insurance fraud.

For policies issued after January 1, 2014, the IRDAI mandates that insurance companies provide at least 80% of the premiums paid if the policyholder dies by suicide within the first 12 months of the policy. After the completion of the first 12 months, the full death benefit will be paid to the nominee as a lump sum.

Exclusions and Conditions for Suicide Coverage

There are certain exclusions and conditions to be aware of regarding suicide coverage in life insurance plans in India:

• Most life insurance plans stipulate that the insurer is not liable to pay the death benefit if the policyholder commits suicide within 12 months of the policy issuance date or revival.
• If the policy has lapsed without the paid-up value being realised, the insurer is not obligated to pay the death benefit in the event of suicide.
• If the policyholder provides any misleading or false information to the insurance company, the claim may be rejected.
• If the policyholder is insured under a group insurance plan, the nominee is typically not eligible for any payment in the event of suicide.

Group Life Insurance and Suicide Coverage

Group life insurance policies, often provided as an employee benefit, may not include a suicide clause. In these cases, beneficiaries will usually receive the death benefit regardless of whether the policyholder's death was due to suicide.

Seeking Help

If you or someone you know is struggling with suicidal thoughts or mental health issues, it is important to seek help. There are confidential support services available, such as hotlines and crisis centres, that can provide assistance and guidance during difficult times.

The suicide clause

Time Period

Payout during the Exclusion Period

During the exclusion period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout. Instead, they might refund the premiums paid up to that point or pay a percentage (usually 80%-90%) of the premiums paid. This is to ensure that the family of the policyholder receives some financial support during this difficult time.

Payout after the Exclusion Period

After the exclusion period ends, the life insurance policy generally covers suicide, and the beneficiaries will receive the full death benefit as outlined in the policy. This is because, after this period, the insurance company assumes that the policyholder did not take out the policy with the intention of ending their life shortly afterward.

Exclusions and Rejections

There are certain exclusions and conditions under which the insurer might reject a claim related to suicide. These include:

• If the policyholder passes away within 12 months of the policy being issued or revived.
• If the policy term has lapsed without the paid-up value being realized.
• If there is any concealed or misleading information provided by the policyholder at the time of enrolment.
• If the policyholder is insured under a group insurance plan.

Impact of Policy Changes

It's important to note that any changes made to a life insurance policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period. This means that the clock starts over, and the suicide clause will apply for the new policy changes.

Importance of Understanding the Clause

How life insurance payouts work for suicide

Life insurance payouts for suicide depend on several factors, including the type of policy, the location, and the time that has passed since the policy was taken out. Here is a detailed overview of how life insurance payouts work in the event of suicide.

Traditional Life Insurance Policies

Traditional life insurance policies, including term and permanent life insurance, typically contain a suicide clause. This clause states that if the policyholder dies by suicide within a specific period, usually one to two years, after the policy is issued, the insurer may deny the death benefit or provide a reduced payout. This exclusion period 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. After this exclusion period, traditional life insurance policies generally cover suicide, and beneficiaries will receive the full death benefit.

Military Life Insurance

Military-focused life insurance policies, such as those offered by Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI), are unique. They typically pay out the death benefit regardless of the cause of death, including suicide or acts of war.

Accidental Death Insurance Policy

Whether accidental death is covered depends on the circumstances of the death and the information disclosed by the insured when applying for the policy. For example, if the insured dies from a prescription drug overdose but disclosed their prescription drug use to the insurance provider, the beneficiaries may still receive the death benefit. However, death by illegal drug overdose is typically not covered.

Group Life Insurance

Group life insurance policies, often provided as an employee benefit, usually include similar suicide clauses to individual life insurance policies. If suicide occurs within the exclusion period, the death benefit may not be paid. However, after this period, group life insurance generally covers suicide.

Life Insurance Payouts After the Exclusionary Period

After the exclusionary period, life insurance policies typically pay for suicidal death just as they would for death from any other insurable cause. The beneficiaries will receive the full death benefit as outlined in the policy.

Life Insurance Payouts During the Exclusionary Period

If a policyholder dies by suicide during the exclusionary period, there is usually no payout of the death benefit. However, life insurance companies often pay the amount of premiums paid on the policy, minus any premiums owed or loan amounts.

What to do if your life insurance claim is denied

If your life insurance claim is denied, the first thing you should do is understand the insurer's reasoning. They are required to provide a written explanation for the denial. Once you have this information, you can gather any relevant documentation, such as medical records or investigative reports, to support your claim and help build a case for an appeal.

In cases of suicide, the insurer's decision will depend on the terms of the policy and how long the policy has been active. If the policyholder died by suicide within the exclusion period, which is typically the first one to two years after the policy is issued, the insurer may deny the death benefit payout. In this case, carefully review the policy's suicide clause and gather any relevant documentation to support your appeal.

If you believe the denial is unjustified, you can contest the decision by presenting evidence and following the process established by the insurer. This process will vary depending on the insurer, so be sure to review their specific guidelines. You may also want to consult with an attorney or insurance professional who can help you navigate the appeals process and improve your chances of a successful outcome.

In cases involving employer group life insurance or similar policies, there is often a limited window of time, typically 60 days, to appeal a denial. Therefore, it is important to act quickly and gather as much supporting documentation as possible to strengthen your case.

Suicide rates in India

Suicide is a major national public health issue in the India. 1.71 lakh suicides were recorded in 2022, registering a 4.2% increase over 2021 and a jump of 27% compared to 2018. The rate of suicide per one lakh population has increased to 12.4 in 2022 which is the highest year for this data. Suicides during 2022 increased by 27% in comparison to 2018 with India reporting highest number of suicides in the world. India's contribution to global suicide deaths increased from 25.3% in 1990 to 36.6% in 2016 among women, and from 18.7% to 24.3% among men. In 2016, suicide was the most common cause of death in both the age groups of 15–29 years and 15–39 years. Daily wage earners accounted for 26% of suicide victims, the largest group in the suicide data.

The male-to-female suicide ratio in 2021 was 72.5 : 27.4.

Estimates for the number of suicides in India vary. For example, a study published in The Lancet projected 187,000 suicides in India in 2010, while official data by the Government of India claims 134,600 suicides in the same year. Similarly, for 2019, while NCRB reported India's suicide rate to be 10.4, according to WHO data, the estimated age-standardized suicide rate in India for the same year is 12.9. They have estimated it to be 11.1 for women and 14.7 for men.

The Government of India classifies a death as suicide if it meets the following three criteria:

• The intent to die originated within the person,
• The act was done by the person, and
• There is a reason for the person to end his or her life. The reason may have been specified in a suicide note or unspecified.

If one of these criteria is not met, the death may be classified as death because of illness, murder or in another statistical category.

NCRB data and the epidemiology of suicide in India reveal that similar to most countries, suicide rates are generally higher among males compared to females. Males have higher suicide rates in middle and older ages while the age group of 15–29 years has the highest suicide rate among females. On average, higher male and female suicide rates are observed in states with higher levels of development, agricultural employment, literacy, and proportions of people identifying with Hinduism. Higher male suicide rates are also observed in states with higher levels of unemployment.

Regarding suicide rates in India by religion and caste status, suicide rates are higher among Christian and other religious groups compared with Hindus while they are also higher among general populations compared with SC, ST, and OBC populations. However, the results vary among different regions, highlighting the substantial geographical heterogeneity of suicide rates across India by caste and religion.

Regarding suicide methods in India, hanging is the primary method and has shown increasing trends among both males and females between 2001-2021. Pesticide poisoning rates observed a downward trend, especially over 2011–2014 following a national ban on endosulfan (a commonly available pesticide). However, recently, pesticide poisoning rates appear to be trending upwards again among males.

Regarding the Coronavirus disease (COVID-19) pandemic and suicide in India, suicide rates in the country increased during the first year of the pandemic. Arya and colleagues found that “suicide rates in India generally showed a decreasing trend from 2010 until 2017, with the trend reversing after this period, particularly for males. Among males and females, the highest increase post-2017 was noted in 2020 (compared to 2017).”

The areas of concern in the overall picture include financial problems, suicide in young adults, daily laborers, and marriage-related stressors in women victims. Thus, policies focusing on the economically marginalized section of society should be a priority to reduce suicide in this group.

Academic failures and relationship issues dominate the causes of suicide in the young. Other causes reported in literature include substance abuse and impulsivity. Introduction of supplementary exams in schools in Chennai was shown to be successful in reducing suicides in schoolchildren. A similar model could be adopted in other parts of the country. Regulation of sale of harmful pesticides has shown initial favorable outcomes in Kerala in terms of reduction of suicide rates. Likewise, provision of safe storage of pesticides has been found effective in Tamil Nadu and can be followed across the country.

Untreated mental illness contributes to a significant proportion of suicidal deaths in the country. Efforts to reduce the mental health gap should be a priority, including training of general physicians in mental health and suicide prevention.

Finally, India needs a well-designed national policy on suicide prevention to ensure that all evidence-based prevention methods are implemented at all levels. The country's first national suicide prevention strategy, released in November 2022, outlines various objectives, key stakeholders, and timeframes. The strategy draws on the World Health Organization's (WHO) model of a multisectoral approach to suicide prevention, with the goal of reducing suicide mortality by 10% in India by 2030.

Frequently asked questions