Life Insurance And Suicide: What's Covered?

Losing a loved one to suicide is a difficult and traumatic experience. In the aftermath, the last thing you want to worry about is receiving a payout from their life insurance policy. So, do life insurance policies cover suicide? The answer is: it depends. Many life insurance policies include a 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. However, if there is no suicide clause or if the clause is no longer in effect, the policy may pay out for suicidal death.

Suicide clauses in life insurance policies

Suicide clauses, also known as suicide provisions, are common in life insurance policies. These clauses typically state that the insurer may deny the death benefit or only refund the premiums paid if the policyholder dies by suicide within a certain period after the policy is issued. The purpose of this clause is to prevent individuals from taking out large policies intending to end their lives soon after so that their beneficiaries can receive substantial payouts.

The exact duration of the suicide clause can vary depending on the insurer and state regulations. For example, while most states enforce a standard two-year period, some states like North Dakota, Colorado, and Missouri have a shorter one-year exclusion period. After this exclusion period ends, the life insurance policy generally covers suicide, and beneficiaries are entitled to receive the full death benefit.

It's 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. Additionally, if an individual replaces one life insurance policy with another, the timeframe for the suicide clause is reset and starts over when the new policy becomes effective.

Group life insurance policies, often provided by employers, usually include similar suicide clauses to those found in individual life insurance policies. However, some group life insurance policies, such as those offered by Veterans' Group Life Insurance (VGLI) and Servicemembers' Group Life Insurance (SGLI), do not contain a suicide clause and typically pay out the death benefit regardless of the cause of death.

Suicide exclusions in life insurance policies

During the exclusion period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout to the beneficiaries. Instead, they might only receive the sum of the premiums paid up to that point. This clause directly affects whether the beneficiaries will receive the intended financial support or not. After the exclusion period ends, the life insurance policy generally covers suicide, and the beneficiaries are entitled to receive the full death benefit.

The suicide clause applies to various types of life insurance policies, including traditional life insurance policies, such as term and permanent life insurance. However, group life insurance policies, often provided by employers, and military life insurance policies may not include a suicide clause, and thus, they typically pay out the death benefit regardless of the cause of death.

It is important to note that changing a life insurance policy, such as adding coverage or converting a term policy into a whole life policy, can reset the exclusion period. Additionally, the insurance company has the right to investigate the cause of death and deny a claim if they find undisclosed health conditions or discrepancies in the policy application.

Contestability periods in life insurance policies

If a policy includes an incontestability clause, the insurance company cannot investigate claims made after the contestability period, and beneficiaries are guaranteed to receive the payout if the policyholder dies after this period.

It is important to note that the contestability period is separate from the suicide clause, which specifically addresses suicide as a cause of death. The suicide clause typically lasts for one to two years and allows the insurance company to deny the death benefit if the policyholder dies by suicide during this time. If the policyholder dies by suicide after the suicide clause period expires, the insurer will pay the death benefit.

Denial of life insurance claims

Life insurance policies are designed to provide financial security for loved ones in the event of an unexpected death. However, in the case of suicide, the situation becomes more complex, and there are instances where life insurance claims may be denied. Understanding the reasons for denial and the steps to take if a claim is denied is crucial for beneficiaries.

Suicide Exclusion and Incontestability Clauses

Most life insurance policies include a "suicide clause" or "suicide exclusion," which states that the insurer will not pay out the death benefit if the insured person dies by suicide within a certain period, typically one to two years, from the start of the policy. This exclusion period is intended to prevent individuals from taking out large policies with the sole intention of providing financial gain to their beneficiaries after their death. After this exclusion period, most policies will cover suicide, and beneficiaries will receive the full death benefit.

In addition to the suicide exclusion, life insurance policies also have an "incontestability clause." This clause allows the insurance company to deny a claim during the "contestability period," which usually aligns with the exclusion period of one to two years. Once this period passes, the claim becomes incontestable, and the insurer cannot deny the claim unless there are serious issues such as fraud or misrepresentation.

Reasons for Denial

If a policyholder dies by suicide within the exclusion period, the insurance company will likely deny the death benefit. Instead, they may reimburse the beneficiary for the premiums paid. Another reason for denial is if the policyholder misrepresented themselves on the application, such as claiming to be a non-smoker to obtain cheaper premiums. Insurance companies can also deny a claim if they discover undisclosed health conditions, underlying mental health issues, addiction, substance abuse, or other high-risk behaviours.

Steps to Take if a Claim is Denied

If a life insurance claim is denied, it is important to understand the insurer's reasoning and take appropriate steps to challenge the decision if necessary. Here are some recommended steps:

• Wait for the insurance company's decision and review their denial letter carefully.
• Examine the insurance policy and application to identify any discrepancies or misrepresentations.
• Check if your state has specific protections for beneficiaries against insurance companies to ensure the denial aligns with state regulations.
• Gather relevant documentation, including the insurance application, policy, proof of premium payments, death certificate, and any other supporting documents.
• Contact the insurance company to appeal their decision, providing all relevant information to support your claim.
• If necessary, consult a life insurance dispute lawyer to review your case and help you navigate the appeals process.

It is important to note that each insurance company has its own list of uninsurable events, and mental health illnesses may be included. Therefore, it is crucial to research and understand the specific terms and conditions of your policy.

Appealing a denial of a life insurance claim

If your life insurance claim has been denied, it is important to understand your rights and the steps you can take to challenge the decision. Here are some detailed instructions to help you navigate the appeals process:

Step 1: Understand the Reasons for Denial

The first step is to determine why your claim was denied. You should receive a denial letter from your insurance company stating the reasons for the denial. Contact the insurance company to clarify any uncertainties and request a copy of your policy for review. Understanding the specific reasons for the denial will help you build your case for the appeal.

Step 2: Familiarize Yourself with the Appeals Process

When you contact your insurance company, ask about their specific appeals process, including how and when to submit your appeal. Every insurance company has its own procedures, and it is crucial to adhere to their required timeframe for submitting your appeal.

Step 3: Gather Evidence and Build Your Case

Once you understand the reasons for the denial, start collecting documentation that will support your appeal. Relevant evidence may include death records, autopsy reports, insurance payment receipts, medical records, investigative reports, and any other documents that can strengthen your case. Be as detailed and thorough as possible in gathering evidence.

Step 4: Consult a Lawyer

The laws governing insurance policies are complex, and consulting a lawyer can be invaluable. A lawyer can help you navigate the legal landscape, communicate with the insurance company on your behalf, and guide you through the best legal and administrative routes for a successful appeal. They will also ensure that you have the necessary evidence to build a strong case.

Step 5: Submit Your Appeal

File a formal claim dispute with your insurance company, including all the evidence and documentation you have gathered. You may choose to submit the appeal yourself or have your lawyer do it on your behalf. Regularly follow up with the insurance company to ensure they have received your documentation and are actively processing your appeal. Request status updates on your appeal, especially as you approach any deadlines.

Additional Considerations:

• Urgent Cases: If your case is urgent, you have the right to request an expedited review process from your insurance company.
• External Review: If your internal appeal is denied, you have the right to take your appeal to an independent third party for an external review. This means that the insurance company no longer has the final say over whether to pay the claim.
• Consulting Professionals: If you feel overwhelmed or unwell during the appeals process, don't hesitate to seek help from loved ones, friends, social workers, or your healthcare team. Additionally, consider reaching out to organizations like the Patient Advocate Foundation (PAF) or the Kaiser Family Foundation (KFF), which provide support and assistance to individuals navigating insurance appeals.

Frequently asked questions