Life Insurance Salesmen: A High Suicide Risk Group?

Life insurance is meant to provide peace of mind, but it can also have a perverse incentive for someone who is suicidal. While most policies include a suicide clause that prevents the insurer from paying out if the insured's death was due to self-harm within a certain period, this can also encourage people to stage their suicide to look like an accident or murder. This has been a popular trope in detective stories and crime procedurals, but it is also, unfortunately, a real-life occurrence.

Life insurance payouts for suicide

Most life insurance policies include what is known as a "suicide clause", which prevents the insurer from paying out to beneficiaries if the insured's death is a result of self-harm or self-inflicted injury. This clause is typically active for a certain period, usually two years, after the policy comes into effect, and is designed to prevent individuals from taking out a policy with the intention of immediately ending their life, thereby providing financial benefits to their beneficiaries. If the insured individual dies by suicide within this exclusion period, the insurer will not pay out the claim.

However, once this exclusion period ends, the policy's beneficiaries can receive a death benefit if the insured person dies by suicide. At this point, the life insurance policy will cover suicide and pay out the death benefit, provided no other terms in the policy have been violated. It is important to note that changing a policy, such as adding coverage or converting a term policy to a whole life policy, can reset the exclusion period.

Group life insurance, often obtained through an employer, and military life insurance generally do not include a suicide clause. Therefore, these policies typically pay out a death benefit if the insured individual dies by suicide. Nevertheless, it is important to review the specific plan, as they can differ. Supplemental life insurance purchased through an employer usually includes a standard suicide clause.

In addition to the suicide clause, life insurance policies also have a contestability period, typically lasting two years, which allows the insurer to deny a claim if undisclosed health conditions or discrepancies are found in the policy application. This period is separate from the suicide clause, and failing to disclose information can be considered insurance fraud.

While the presence of a suicide clause may deter individuals from taking out a policy with the sole intention of benefiting their loved ones financially, it is important to recognize that life insurance policies do provide coverage for suicide beyond the exclusion period. This coverage ensures that beneficiaries receive financial support during a difficult time, even if the insured's death is a result of suicide.

Suicide clauses in insurance policies

Suicide is among the leading causes of death for people aged 10 to 64. Life insurance policies often contain a suicide clause, also known as a suicide provision, which limits the payment of benefits in the event of a policyholder's death by suicide.

A suicide clause is a standard clause in life insurance policies that restricts payments made to survivors of a policyholder who dies by suicide within a certain period after purchasing the policy. This period is known as the exclusion period and typically lasts for two years, although it can vary from one to three years depending on the insurer and the state. For example, in Colorado, Missouri, and North Dakota, the exclusion period is only one year. After the exclusion period ends, the policy's beneficiaries can receive a death benefit if the insured person dies by suicide.

The purpose of the suicide clause is to prevent people from having a financial incentive to take their own lives. Without such a clause, someone could purchase a life insurance policy and immediately take their own life, knowing that their loved ones would receive financial benefits.

Group life insurance policies, often obtained through employers, typically do not contain a suicide clause. As a result, beneficiaries of a covered person who dies by suicide would generally receive the death benefit. On the other hand, individual term life insurance policies have exclusion periods, and beneficiaries may only receive the sum of premiums paid to date if the insured person dies during this period. Whole life insurance policies may allow beneficiaries to receive the plan's cash value even during the exclusion period.

Changing a life insurance policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period. Insurance companies may request additional documentation, such as an autopsy report or medical records, if they suspect suicide as the cause of death. This can delay the payout of benefits to beneficiaries.

Exclusion periods

The exclusion period varies by insurer but is usually two years. After this period, the policy's beneficiaries can receive a death benefit if the insured person dies by suicide. However, changing a policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period.

It is important to note that group life insurance policies, often obtained through an employer, do not typically include a suicide clause. Therefore, beneficiaries will usually receive the death benefit if the insured person dies by suicide.

In the event of the policyholder's suicide within the exclusion period, the life insurance company will usually refund the premiums paid on the policy.

Mental health and insurance

Mental health is just as important as physical health, but insurers have not always seen it that way. In the past, health insurance companies often provided better coverage for physical illness than for mental health disorders. However, in 2008, the Paul Wellstone and Pete Domenici Mental Health Parity and Addiction Equity Act was passed, requiring coverage of services for mental health, behavioral health, and substance-use disorders to be comparable to physical health coverage. Despite this, many people are still unaware of the law, and finding mental health care can be difficult.

More than one in five adults in the US live with a mental illness, but only about half receive treatment. Many struggle to find a therapist who will accept their insurance. An NPR/ProPublica investigation found that therapists, psychologists, and psychiatrists who join insurance networks often leave due to reimbursement challenges, red tape, and bureaucracy. This results in patients paying out of pocket or being unable to access care.

The investigation also revealed that insurance companies often decide the length of care and who gets covered treatment. Providers experience a lot of red tape, delayed and low payments, audits, and reviews. Therapists' rates have remained stagnant and notoriously low, making it challenging for them to keep up with expenses. As a result, many providers choose to go out of network, where they can earn double the in-network rate.

Additionally, claims are often denied based on "medical necessity," with insurance companies creating their own internal standards to challenge diagnoses or treatment plans. This can lead to denials of care, even in cases where patients are at risk of self-harm or suicide.

To address these issues, insurance companies need to improve reimbursement rates and reduce bureaucratic barriers for mental health providers. Employers also have a role in promoting mental wellbeing among their employees, fostering a culture of empathy and understanding, and adapting to new styles of work that offer more flexibility.

In conclusion, while the Mental Health Parity and Addiction Equity Act has helped improve mental health coverage, there are still significant challenges in accessing care. By addressing these challenges, we can ensure that those struggling with mental health issues can get the support and treatment they need.

Appealing a denied claim

Life insurance claim denials are rare, but they do happen. One of the most common reasons for denial is policy delinquency, which occurs when a policyholder fails to pay their premiums on time, causing their coverage to lapse. If the insured dies by suicide, insurers won't pay out if the suicide clause is in effect, which is usually during the first two years of the policy. Other reasons for denial include material misrepresentation, such as lying about medical history or occupation, and documentation failure, such as not providing a death certificate.

If your life insurance claim is denied, you have the right to appeal the decision. Here are the steps to take:

• Understand the denial reason: When an insurance company denies a claim, they are required to provide a clear explanation of their decision. Review the denial letter carefully to understand the specific reason for the denial.
• Gather relevant information: Collect all the necessary documents, including the insurance application, policy, proof of premium payments, death certificate, and any other supporting documents that can help your case.
• Contact the insurance company: Reach out to the insurance company to ask questions about the denial, what paperwork you need, and their appeals process. They can guide you through the next steps and clarify what additional information or actions are required.
• Appeal the decision: You have the right to appeal the insurer's decision and request them to reconsider. Present any additional supporting documentation that addresses the specific objections to the denial. For example, providing proof of premium payments can disprove policy delinquency, or autopsy results can show that the insured did not die by suicide during the contestability period.
• Consider external support: If needed, you can seek free help from your state department of insurance or attorney general, who can provide expertise in insurance navigation and add weight to your appeal. Alternatively, you can hire a lawyer to make your appeal or prepare a lawsuit, although this option may be more costly.
• Prevent future denials: To avoid potential claim denials, it is crucial to be honest and forthcoming on your insurance application, disclosing any relevant information such as medical history, occupation, and hobbies. Additionally, consider setting up automatic premium payments to prevent policy lapse due to missed payments.

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