How Does Life Insurance Work After a Suicide?

Updated

It’s a rather grim statistic, but according to the National Center for Health Statistics, suicide rates in the U.S. have seen a 35% increase between 1999 and 2018. The National Mental Health Institute reports that the suicide rate for women is highest for women between 45 and 54, while for men, it’s age 65 and older.

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Many of these people are among the 54% of Americans that own a life insurance policy. Was their life insurance policy valid even if the cause of death was suicide? Do their beneficiaries receive the full amount of the intended death benefit?

This article will explore the answers to these questions and others often asked about suicide and life insurance. 

Does Life Insurance Pay for Suicidal Deaths?

With suicide being the tenth leading cause of death for Americans, many life insurance companies have special provisions written into their policies addressing death by suicide and the payment of death benefits to beneficiaries.

The majority of life insurance companies typically require that a policy is in force (active) for a minimum of two years before the full death benefit is paid to a policy’s beneficiaries. Some companies will refund a portion of the premiums paid before the suicide directly to the policy’s beneficiary. 

What happens when you die—is your claim likely to be paid by the life insurance company? According to the American Council of Life Insurers, 99% of all life insurance claims are paid in full as long as premium payment is current and whether or not suicide is the cause of death.

Some life insurance companies are a bit more restrictive regarding suicidal death provisions in their policies. They require that the insured report any issues regarding mental health or addiction to avoid a death claim being denied. Rates are typically not raised once a policy has been issued and disclosure has been made. However, many life insurers will decline to approve a policy on an individual with a history of mental illness.

» MORE: Having a legal will is not enough. Find out what else you need to ensure your loved ones are taken care of.

 

The Incontestability Clause

This clause is written into all policies and is particularly important for life insurance and suicide. It states that after a defined period of time passes, usually two years, the insurance company cannot deny paying a claim due to an error on the application or other documentation, unless it was intentional or fraudulent.

There are exceptions to the incontestability clause. They include:

Misstatement of age or gender. Though a life insurance company can’t deny a claim based on an incorrect age or gender being stated on the application, premium rates may be adjusted to reflect accurate information.

Short-term contestability. In some cases, insurers can decline claims payment for 1-2 years after the policy is issued if the policyholder is physically or mentally unwell when they applied for coverage. They would be fully covered once the waiting period has passed.

Intentional misstatement by the insured. If the insured intentionally lied to the insurance company when they completed their insurance application, the incontestability period doesn’t apply, and the policy can be voided.

The incontestability clause could have an impact on payouts in the event of suicide.

Suicide Clauses by Type of Coverage

The type of life insurance policy in force can affect the suicide provisions in a policy. Here are some different policy types and how they address suicide:

Group life Insurance. Many group life insurance policies offered through an employer don’t have a suicide clause. If the insured dies by suicide at any time after the policy is issued, their beneficiaries will typically receive the death benefit.

Term life insurance. The exclusion period applies to term life insurance policies. If the insured dies during the two-year incontestability period, the beneficiaries may receive the sum of the premiums paid since the policy went into force. 

Whole life insurance. Whole life insurance policies accumulate cash value and have a death benefit portion of the policy. With whole life policies, it’s at the discretion of the life insurance company to pay the beneficiaries the accumulated cash value if the covered person dies by suicide during the contestability period. When the exclusion period is over, the beneficiaries can receive the full death benefit.

How Do You Cancel Life Insurance After a Loved One Dies From Suicide?

When a loved one dies from suicide, the life insurance company is notified, and the claim is processed, the life insurance policy will automatically cease to be in force any longer, unless there was a spouse included on the policy, such as a second-to-die insurance policy. 

Bear in mind that someone can cancel a life insurance policy at any time, for any reason. This can be done by stopping payment or calling the insurance company. There can be penalties for early termination, and premiums are unlikely to be refunded unless done during the “free look” period.

Life Insurance, Suicide, and Depression

Before they issue a life insurance policy, underwrites working for the insurer look at many factors for each applicant that could affect their insurability, such as health, age, weight, lifestyle habits, and family medical history. In addition to disclosing information on physical illnesses, because of its relationship with suicide, the applicant's mental health is also scrutinized.

Because of their relation to suicide, anxiety, depression, or stress-related mental illnesses are all factored into the underwriter’s decision on insurability. The underwriter can, and often does, request and review medical records from an applicant’s physicians to learn which medications they’ve previously taken or are currently taking.

Having depression or an anxiety disorder won’t disqualify someone from coverage, but it could result in their premium rate being raised. If the disorder is being treated and is controlled, premium rates are usually not increased. The insurance company can also offer a reduced benefit in the event of suicide.

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What About Physician-Assisted Suicide?

Also known as “death with dignity,” terminally ill adults can receive lethal doses of medications that will end their life intentionally from physicians. This practice is legal in eight states and Washington, D.C. These states may not follow the routine practice of having an incontestability clause in policies, and life insurers doing business there may provide payouts for insureds that have used physician-assisted suicide.

The contestability clause would still apply in other states, meaning that payouts for physician-assisted suicide are similar to payouts for suicide. This means that the life insurance company will only pay out the death benefit to the beneficiaries after two years of being in force.

Being truthful on an application, even in the case of a terminal illness, is best because the policy won’t be voided for fraud and will eventually provide a payout of a death benefit to beneficiaries. This death benefit helps the individual responsible for funeral costs.

Contesting Life Insurance Claims Denial

In the event of death by suicide, or other means, life insurance companies may attempt to deny the payment of death benefits to beneficiaries. A good example of this is Academy Award-winning actor Heath Ledger, who died in 2008 when he was in his late twenties.

Even though the New York Medical Examiner ruled the official cause of death as acute intoxication, a $10 million life insurance policy he had bought had the claim denied on the grounds of his death being “suspicious.” Only after a long, drawn-out trial did Ledger’s daughter receive what amounted to be a fraction of the policy’s death benefit

Life insurance companies have a process for appealing denied claims, and they have been known to reverse their ruling on a suicidal death and pay the claim. However, if a family feels that a claim has been unjustly denied, appealing to their state’s insurance commissioner can help, as can hiring an attorney to protect the interests of the beneficiaries.

How Does a Life Insurance Company Know if Someone Died by Suicide?

Whenever someone dies and their beneficiaries file a claim, a death certificate must be presented to the life insurance company. The cause of death, and if the decedent’s death was self-inflicted, is disclosed on the death certificate.

In cases where a death certificate is inconclusive or discloses a questionable cause of death, the life insurer may require that additional information be provided, such as a medical examiner report, autopsy report, EMS report, or the decedent’s medical records.

Death by suicide often takes longer to investigate, resulting in the beneficiaries experiencing a delay in receiving the policy’s death benefit. 

Life Insurance and Suicide Frequently Asked Questions

If you still have questions about life insurance in the event of suicide, the answers to these FAQs might help. 

» MORE: Having a legal will is not enough. Find out what else you need to ensure your loved ones are taken care of.

 

Does life insurance cover all types of death, including suicide?

Life insurance will pay out for all types of death and illness, whether by accident or by natural causes, as soon as the policy is in force. Suicide is the exception – there is a two-year waiting period in most states before the insurance company will pay a claim if the insured dies by suicide.

Can you get life insurance if you have depression? 

Most life insurance companies will issue a policy to someone suffering from depression, though they may charge higher premium rates because of it. If the depression doesn’t affect the insured's day-to-day activities or is managed with medications or therapy, the applicant may qualify for standard or preferred rates.

What is a life insurance suicide clause?

A life insurance suicide clause stipulates that if the insured dies by suicide during the first two years that a policy is in force, the insurer will not pay out a death benefit. Once the two years pass, the insurance company will pay out a death benefit in cases of suicide.

Help For Anyone Contemplating Suicide

If you or someone you know is suffering from depression or a mental health disorder, get help immediately. You are not alone. If you or a loved one is contemplating suicide, contact the National Suicide Prevention Lifeline at 1-800-273-8255. The lifeline is available 24/7 and provides free and confidential support.

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