June 9, 2019

Does Life Insurance Cover Suicide?

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Life insurance provides financial support in case of a death. But what happens if the policyholder commits suicide? Keep reading to learn more.

Suicide claimed the lives of more than 47,000 people in 2018, according to the National Institute of Mental Health. If you have recently lost a loved one to suicide, the last thing you're likely thinking about is money.

But there are questions that will impact your future, even in this difficult time. Many people assume that if a loved one commits suicide, the life insurance will not pay out.

Read on for answers to this and other questions about life insurance benefits in cases of suicide.

Death Benefits in the Case of Suicide

When a policyholder commits suicide, the death benefit is dependent on the policy's suicide clause. This provision is typically in place only during the first two years, or hold period, of the policy. However, in some cases, it stays in effect for the life of the policy.

Insurance companies include the suicide clause to prevent people from purchasing the policy and then committing suicide immediately thereafter.

In this case, insurance companies would pay the death benefit without collecting any premium payments.

This "fine print" makes the policy null and void should the policyholder die in certain ways, including self-harm and suicide. Usually if the suicide is committed after the two-year period, the death is covered and the death benefit will be paid.

However, this isn't always the case. Sometimes, the insurer will only return premiums paid—not the full death benefit—even if the two-year hold period has passed.

Usually, a clause within the policy clarifies the circumstances that may limit what will be paid. These circumstances may include:

  • Drug overdoses.

  • Accidents under suspicious circumstances.

  • Death related to suspicious health circumstances (for example, if you state that you are a non-smoker on your policy, but die soon after from lung cancer).

Even under these difficult circumstances, try to file the claim as soon as you can.

You can also contact your loved one's life insurance company or agent. They can assist in filing a claim, and help you determine what you will or will not be paid.

Denial of Benefits Due to Mental Illness

Most companies require you to take a health exam, or answer health questions via an online application or phone interview when applying for life insurance.

Some of the questions relate to mental health and/or drug or alcohol addition/dependencies.

Some questions include:

  • When were you were first diagnosed with depression/mental illness?

  • How would you describe the severity of your depression?

  • Have you sought or are you currently seeking treatment through medication and/or therapy?

These answers affect your "risk score," a calculation of how much risk the insurance company takes on by insuring you.

The higher your risk, the more likely you are to die without paying for the full term or policy limit. That means they lose money.

The opposite is also true—if you present less risk of dying before paying the full term/policy limit, you'll likely be approved for higher coverage amounts.

Answering these questions does NOT automatically disqualify you for a policy. But if you have a history of mental illness and don't tell the company, you run the risk of eliminating any benefits to your beneficiaries. This is specifically the case if you commit suicide.

In other words, the insurance company will have the grounds to deny your claim because technically, you committed fraud. ALWAYS be honest on your application, even if it affects your ability to get a higher term or coverage amount.

Your family and beneficiaries could be hurt in the long run when the claim is denied and they don't receive the death benefit.

If you are diagnosed with a mental illness after you are approved for a policy, the insurance company cannot raise your rates or cancel your coverage.

Life Insurance and Physician-assisted Suicide

Physician-assisted suicide involves terminally ill people who choose to end their life rather than suffer through pain, treatments, or a diminished quality of life.

This type of suicide is considered legal in seven states if individuals have a terminal illness and a prognosis of six months or less to live. There are other stipulations around how it can be done, and the physicians who can do it.

Physician-assisted suicide falls under the suicide and contestability clauses listed in the policy. It is not covered and will not pay out within the first two years of the policy, but likely will after the two years if you live within those seven states.

Filing a Claim

When filing a claim, there are a number of steps you have to take to ensure a smooth, quick payout.

  1. Contact the life insurance agent.
    This isn't a required step, but they will be able to help guide you through the process and tell you what you need and what you should know.

  2. Obtain and submit a copy of the death certificate.
    This can be purchased from the funeral home or state records office in the state the policyholder passed away in.

  3. Contact the insurance company.
    Most funeral homes will do this for you, but you can choose to contact the company yourself. This is to inform them of the death of the policyholder.

  4. Fill out the paperwork.
    Generally, the next step is for the insurer to send you a packet of information, including forms for the beneficiary to fill out and return.

    The paperwork will ask for personal information about the beneficiary, like their name, address, and Social Security number. It will also explain the options for receiving the death benefit, such as:

    • A lump sum payout in the form of check.

    • A direct deposit into a bank account.

    • A wire transfer.

    • Life income (you receive a monthly payout amount for a guaranteed period of time based on the death benefit amount).

    You will also be asked to submit a copy of the death certificate. Once you make your payout election, you return the forms to the insurer.

  5. Wait for the payout.
    Once you submit the paperwork and death certificate, the insurer will begin to process the claim. If no further information is needed, you will receive the death benefit payout in the form you elected.

Keep reading to learn more about how the payout process may unfold if the company contests a claim.

Contestability and Incontestability Clauses

Unfortunately, an insurance company can deny a claim on any grounds they can make stick. This can include the suspicion of suicide or a death ruled natural or accidental with lingering questions.

However, the company must have either:

  • Cause and evidence of fraud.

  • Proof that the policy terms disqualify the death benefit payout.

Most policies contain clauses to outline how this process can—and cannot—unfold.

Contestability Period
The clause gives the insurer the ability to contest, or question, the death of the policyholder and potentially deny the claim within the first two years. If that happens, the insurer most likely will NOT pay the death benefit to beneficiaries.

Most term life insurance policies have this clause. It protects the company from losing money due to false statements on an application.

Incontestability Period
Most policies have this clause. It stipulates that after the two-year hold period has ended, the company CANNOT avoid paying the death benefit based on misstatements on an application.

The insurer must be able to provide proof the misstatement was done intentionally.

This provides protection for the policyholder in case an accidental mistake was made on the application. The insurer has two years to catch any errors on the application. If they don't, they must pay the death benefit.

For example, if on your application, you misstate your age or gender, the insurer will not void the policy. Instead, they will adjust the death benefit or premiums to reflect your true age.

The incontestability clause does not protect you from intentionally reporting false information on your application. That is considered fraud. You could face fines or even jail time for these actions.

What to Do if Your Claim Is Denied

Denial of a death benefit claim does NOT necessarily mean you aren't entitled to the death benefit. Nor should you rely on the insurance company to let you know if they've taken incorrect actions.

Upon claim denial, you have a couple of options:

  1. If your loved one did commit suicide.
    Talk to the company and an attorney about your rights. Review the parts of the policy regarding the death benefit payout.

  2. If you believe the claim was denied improperly.
    Work with the insurance company to provide the proper documents and information to fight the denial.

    Consider hiring an attorney to help navigate the process. In some cases, you may need to sue the insurance company for payment.

    Denied claims or delays due to an investigation can take months, even years, to resolve. Sometimes the policy's suicide clause does ultimately give grounds for denial.

    In this case, the only thing you can do is ensure the premiums paid are returned to you if the death happened after the hold period.

Bottom Line

If you've lost a loved one to suicide, the last thing on your mind is filing a claim on their life insurance policy.

But you and your family will need support. This is why they purchased a policy in the first place. Filing the claim for the death benefit can help ease the financial burden you may be feeling during this time.

If you or a loved one is experiencing depression or thoughts of suicide, you are not alone.

Seek help through local resources or national foundations, like the CDC Suicide Prevention Center. Or call the National Suicide Prevention Lifeline at
1-800-273-8255

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