Does Life Insurance Pay for Suicidal Death?
Learn about how life insurance companies deal with death by suicide.
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According to the Centers for Disease Control and Prevention (CDC), suicide was the tenth leading cause of death in the United States in 2019.
It was also the fourth leading cause of death for adolescents aged 15–19 globally. When suicide is the cause of death it can have a serious impact on life insurance.
This article will explain life insurance coverage for suicidal death in the U.S. , the exceptions, and how to successfully claim after suicide.
Source: Pexels
When Does Life Insurance Cover Suicide?
Most life insurance companies will pay out benefits for suicidal death after two years of having a policy.
Help for Anyone Contemplating Suicide
If you or someone you know is suffering from depression or mental health issues, get help now. You are not alone.
If you or a loved one is contemplating suicide, contact the National Suicide Prevention Lifeline at 1-800-273-8255 or via live chat.
There are two clauses in most life insurance policies that protect the company for the first two years in the case of a potential suicide.
The incontestability clause gives the life insurance company the right to investigate your cause of death.
The suicide clause gives the life insurance company the ability to reject your beneficiary's claim if the cause of death was self-harm.
Incontestability Clause
The incontestability clause typically covers the first two years of a life insurance policy, during which the insurer can contest or deny a claim for various reasons.
If a person commits suicide within this period, their life insurance provider will investigate the circumstances of their death and the beneficiaries may be denied a claim.
Maintaining the same death benefit and converting from a term life insurance policy to a whole life insurance policy does not reset the exclusionary period.
As long as the contestability and suicide clauses have expired, and there is no evidence of misrepresentation or fraud, suicide should be covered and the death benefit paid to the beneficiary.
What is a Suicide Clause?
A suicide clause is a common addition to life insurance policies. This clause states that a life insurance provider doesn't have to pay out a death benefit if:
The cause of death is suicide
The policyholder only had the policy for two years
Life insurance companies include this provision to prevent an applicant from getting a life insurance policy and taking their own life immediately afterward.
Instead of the death benefit, beneficiaries could get a refund of any premiums paid, and possibly some cash value from the insurance policy.
What is a Death Benefit?
A death benefit is a payout to the beneficiaries of a life insurance policy. Life insurance death benefits are sometimes called the face value.
Face value is different from cash value — the amount you receive when you surrender your policy.
A face value is also not subject to income tax and can be paid out in a number of ways, including:
Lump sum payments
Annuities
Installment payments (usually monthly)
Retained asset accounts
How do Suicide Clauses Work?
Insurance companies want to ensure that people have no financial incentive to commit suicide. This is why suicide clauses exist.
As previously stated, insurance companies usually do not pay a death benefit if the covered person dies by suicide within two years of coverage.
This is commonly known as the exclusion period. After this period ends, the beneficiaries can receive a death benefit if the covered person dies by suicide.
Colorado, Missouri, and North Dakota are the only three states that are exceptions to the two-year exclusion period, having America's shortest exclusion period of only one year.
In many cases, any changes to a policy can restart the exclusion period. These changes include adding coverage, converting a term policy into a whole life policy, etc.
Source: Unsplash
Suicide provisions may differ depending on the type of life insurance you have, such as group term and permanent life insurance.
Term Life Insurance
Term life insurance is a type of life insurance policy that provides coverage for a certain period or a specified number of years.
Life insurance companies usually offer term life insurance contracts for 30, 20, 10, and one year (known as annually renewable term life cover).
If the insured dies during the time period specified in a term life insurance policy, and the policy is active, a death benefit will be paid out.
In the case of an individual term life insurance policy, the beneficiary will get the full benefits if the insuree dies by suicide after the exclusion period is over.
However, if the person dies by suicide before this period is over, they will only receive a cash payout of the amount in premiums paid.
Permanent Life Insurance
Permanent insurance plans cover beneficiaries for their entire life and do not expire. As long as a policyholder pays their premiums, their permanent life contract will be valid.
One type of permanent life insurance is universal life insurance. These plans are more flexible than whole life plans in terms of making changes to coverage and costs.
They have a minimum and maximum monthly premium and let policyholders pay any amount between these two levels. Policyholders can also adjust their death benefit amounts and payment terms.
Group Life Insurance
Group life insurance or group term life insurance is a type of term insurance contract issued to cover multiple people.
The most common group life cover people get is through their employers. However, you can also get it through unions or professional associations.
Group life insurance policies usually don’t have suicide clauses, which means when a person dies by suicide, their beneficiaries will receive a death benefit.
How Does an Insurance Company Know if Someone Committed Suicide?
If you're ever in a position where you have to claim a death benefit, here's what you can expect.
As soon as a policyholder dies and their beneficiaries file a claim, the insurance company will request a death certificate.
On the death certificate, it will state the cause of death and whether or not it was self-inflicted.
If the death was self-inflicted, the insurance company treats it as a suicide.
However, if the death certificate is inconclusive or the cause of death is questionable, the insurance company can request additional documentation to determine the cause of death, such as:
An autopsy report
A medical examiner report
An emergency medical services (EMS) report
The person's medical records
These investigations can take some time, which could delay the death benefit payout.
Different Coverage Scenarios for Suicide?
Source: Pexels
'Death with Dignity'
As long as a person has had their policy for two years, their life insurance company should pay out for:
Suicide
Euthanasia
Death with dignity
What Is Euthanasia or ‘Death With Dignity’?
Death with dignity is a state-regulated end-of-life option.
It permits some terminally ill patients to voluntarily and legally request and receive prescription medication from their doctor to quicken their death in a peaceful, humane, and dignified manner.
Drug or Alcohol Overdose
With most life insurance policies, drug or alcohol overdose is classified as an accident as long as it wasn’t intentional.
This means the policy will pay out death benefits to the insured person’s beneficiaries if they die from an accidental drug overdose.
However, things can get tricky if a policyholder dies of a non-accidental drug overdose before the end of the exclusion period.
In this case, the insurer would need to prove the overdose was intentional to withhold the death benefit.
Can You be Denied a Life Insurance Policy Due to Your Mental Health?
With a mental health illness, it is possible to obtain life insurance, but the decision is based on the nature of the condition and recent medical history.
According to Laura Peters, an advice manager at Rethink Mental Illness, what insurers are judging as ‘high-risk’ mental illness seems to be based on an increasingly outdated understanding of it.
Mental health can therefore have an impact on life insurance coverage. In some situations, people can be “penalized” for their condition with heavy premiums or flat-out rejection.
For example, if the severity of your condition has recently worsened, an insurer may refuse to cover you.
However, life insurance companies can't just deny coverage based on mental health. The Equality Act protects American consumers from discrimination based on disability, including mental health issues.
A provider, for example, may not be required by law to sell you life insurance after learning of your mental health illness, but they can only deny you service based on reasonable, trustworthy, and relevant information.
Help for Anyone Contemplating Suicide
If you or someone you know is suffering from depression or mental health issues, get help now. You are not alone.
If you or a loved one is contemplating suicide, contact the National Suicide Prevention Lifeline at 1-800-273-8255 or via live chat. It’s available 24 hours a day, seven days a week, and provides free and confidential support.
Source: Unsplash
How to Contest a Life Insurance Claim Denial
If a life insurance provider ever denies your life insurance claim, they will give you a written notice explaining their decision.
If you do not agree with their decision, you have the right to appeal. This process starts with a call to the insurance company.
During this phone call, your insurance provider can answer questions about your claim and explain their appeals process. You’ll need to present documentation to support your appeal, including:
An autopsy report
Medical documents
Proof of premium payments
Next, after getting the relevant documentation, you’ll have to officially appeal the rejection.
The most affordable way to contest the decision is with the insurer directly. You can also hire a lawyer to make your appeal or to prepare a lawsuit, but this can be costly.
How to Prevent a Denied Life Insurance Claim After Suicide
Life insurance companies will deny a death benefit claim if policyholders do not disclose all the relevant information to them.
While it may be difficult and discomforting to share these details, providing false information can cause your family's claim to be rejected. Our advice is to always be honest in your applications to avoid claim rejection and policy contestations later on.
Even if you’ve tried to commit suicide, had suicidal thoughts, or have a history of mental illness, there are usually some insurers that will cover you.
When applying for life insurance coverage, you’ll have to disclose the following with accompanying documents:
All medications you've taken or are currently taking
Any history of drug or alcohol use, abuse, or treatment
Any diagnosis or treatment for mental health conditions
Any participation in risky activities
Source: Unsplash
Where Can I Learn More About Life Insurance Policies?
We know that choosing the right life coverage can be difficult. At PolicyScout, we have many resources to make this decision easier.
Check out our Life Insurance Hub to learn about other types of life insurance.
We have articles that cover term, permanent, and supplemental life insurance, as well as life insurance for parents, final expense insurance, and cash value insurance.
You can also reach out to one of our trained consultants on 1-888-912-2132 or at help@policyscout.com for advice and guidance on the best providers and plans in your area.