This is a difficult subject to discuss, but life insurance is designed specifically to deal with the most difficult event in life, so it’s one we have to cover. Suicide, unfortunately is very much a gray zone when it comes to life insurance. With most other causes of death, outcomes are known and more easily covered. But suicide has some twists and turns that can produce unexpected results when it comes to life insurance.
Unfortunately, suicide is not an uncommon cause of death. According the the Centers for Disease Control (CDC), there were 41,149 suicides in the US in 2013. It also represents the 10th leading cause of death in the country.
None of this means that suicide isn’t covered by life insurance, only that it is more complicated.
The Two Year Contestability Clause
This is probably the most common consideration in regard to suicide. Life insurance policies contain a contestability clause, which represents a period of time in which the life insurance company can challenge the insurability of the person named in the life insurance policy. It usually covers the first two years of the policy, but it can go as long as three years.
During this time the insurance company has the right to challenge the payment of the death benefit. For example, the insurance company may suspect that the insured died as a result of an illness or condition that was known but undisclosed at the time of application.
If they can prove this be the case, they can legally refuse to pay the death benefit of the policy.
The language in this clause usually specifically references suicide as a contestable cause of death. Though this may sound harsh, it’s actually designed to protect the insurance company from the possibility that someone might purchase a large life insurance policy, and then commit suicide for the benefit of their loved ones only days or weeks later.
But there are also reasons why an insurance company might refuse to pay the death benefit, even after the period contestability ends.
Non-Disclosure of Contributing Health Conditions
There are certain health conditions that have a close correlation to suicide. These include depression, bipolar disorder and other psychological conditions that can result in suicide.
That doesn’t mean that an insurance company will decline an applicant who has these disorders. However if the person does, and fails to disclose it on the life insurance application, this can be the basis of a claim denial.
Generally speaking however, the insurance company will become aware of the condition through the investigation of the insured’s medical records. The company would then make a determination as to whether or not they will approve the policy.
Accidental Death Treated as Suicide
This is an even more complicated outcome. Insurance companies can sometimes determine that what appears to be an accidental death is actually suicide. If the policy contains language that specifically excludes payment of the death benefit in cases of suicide, it can become a problem.
Here’s how it plays out. The insured engages in a certain activity that results in his death. The insurance company determines that the activity was actually suicide, and not an accident. Again, if the policy specifically excludes payment of benefits in the event of death by suicide, they may deny the claim.
This is not an uncommon situation either. Once again citing statistics from the CDC, 33.4% of suicide decedents tested positive for alcohol, 23.8% for antidepressants, and 20.0% for opiates, including heroin and prescription painkillers. An insurance company might make a claim that a person who dies after ingesting any of these substances is actually suicide, and not an accident.
Premiums Must be Paid Up to Date
This is a cause for nonpayment of benefits that applies to virtually any life insurance policy, regardless of the cause of death. If the premiums have not been paid up to date, the insurance company may decline to pay the claim upon death.
Many states require that insurance companies offer a reasonable grace period for the payment of the premium after the actual due date. If the insured dies without having made payment by the premium due date, but before the expiration of the grace period, the company must pay the claim.
The problem in the case of suicide is that the insured may not pay his or her bills for a long amount of time before death. If that’s the case, then death benefits will not be paid, even on a policy that had been in force for many years.
Check the “Fine Print” on Your Policy
None of this means that insurance companies will not pay death benefits in the event of suicide. However, you do need to know what the specific provisions and exclusions of the policy are. That means that it is important that you read the “fine print” in a life insurance policy, paying particular attention to exclusions.
Virtually every life insurance policy contains a list of exclusions, and that sometimes includes suicide even after the period of contestability. If it doesn’t, then the claim would be paid even in the event of suicide. And if you’re in the process of purchasing life policy, either for you or for someone else, you should make sure that suicide is not a listed exclusion.
Life insurance policies can be complicated. They are, after all, legal contracts, and they can contain often mysterious provisions. But we’re here to help you sort through any such complications. Give us a call, and let us help you navigate successfully through the life insurance purchase process. We’ll explain it all in plain language, and make sure you understand exactly what it is you’re getting for your premium dollars.
