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Life Insurance & Suicide: Does Life Insurance Pay for Suicidal Death?

Learn how life insurance companies handle policyholders who commit suicide and how suicidal death affects the benefits payout to beneficiaries.

People buy term life insurance and other types of life insurance to cover their loved ones’ financial needs. The goal is to have life insurance provide for their family should they pass away early. 

Life insurance companies provide that benefit at a cost. Different types of life insurance work in different ways. 

No matter which type of insurance policy you buy, you’re buying it from a for-profit life insurance company.

Life insurance companies want to be profitable but competitive. So, they insert clauses and other rules in their policies to attempt to lower risk and deter fraud.

One area where life insurance companies see a potential risk is the suicide of policyholders.

For this reason, life insurance companies have certain safeguards written into their policies surrounding suicide.

But does life insurance pay for suicide?

Here’s what you should know about life insurance policies and whether they’ll pay out a death benefit to the policy’s beneficiaries for a suicidal death. 

Keep in mind, each policy is different. Consult your policy for the specific circumstances that govern it. Only then will you know for sure if your policy will cover a suicidal death and under what circumstances.

How Life Insurance Suicide Clauses May Work

One of the main clauses that will help you determine if your policy covers suicide is the suicide clause. 

This clause is likely in your life insurance policy. It essentially states when suicide is a covered death.

Suicide clauses help protect life insurers and help keep rates lower. They prevent someone from taking out a life insurance policy then committing suicide. 

Look:

If these didn’t exist, someone could potentially buy a policy. Then, once it is in place, they could immediately commit suicide.

This would provide a financial windfall for their beneficiaries to cover potential money problems.

Suicide clauses vary by state

The rules regarding suicide clauses vary from state to state. 

  • In general, most suicide clauses limit payouts in the first two years of the policy.
  • In some states, the period may be limited to one year.

If the insured person dies from suicide during this period, the death benefit is not paid out.

However, the policy may pay out after this period unless other terms prevent a payout.

There may be a grey area, though.

Occasionally, life insurance companies may fight to prevent a payout. 

For example, a person could drive their car off a cliff to commit suicide. If there is evidence this was suicide, there may not be a payout during a suicide clause period. Evidence that the death was a suicide could be in the form of a suicide note or in many other ways.

That said, the person driving may have had a heart attack before driving off the cliff. In this instance, the death could be covered and a payout could happen.

Even if your policy states one thing, check with a lawyer in your state. If your state’s laws contradict your policy, your policy’s clause may not be the final say.

For example, the length of a suicide clause may be in question. If your suicide clause states a two-year waiting period but state law requires a one-year waiting period, state law may supersede the policy.

Check with a lawyer if you’re uncertain and facing issues with a payout.

Other payouts may still occur

Still:

A suicide clause isn’t the final say.

There may be other portions of your life insurance policy that could limit a payout, too. 

It is essential to read your life insurance policy’s terms and conditions in full. This way, you’ll know if other clauses or terms could limit a death benefit payment.

What is a Contestability Clause?

A contestability clause could also prevent a life insurance payout. Death by suicide wouldn’t necessarily be an issue with the contestability clause, though.

Instead, your life insurance provider could prevent a payout based on other reasons.

Essentially, a contestability clause allows life insurers to contest a payout.

This is based on fraud, errors or omissions during the life insurance application process. 

The timing is usually limited to a contestability period. This period typically lasts about two years in length.

Once the contestability period passes, life insurance companies may still be able to avoid payouts. It depends on how the policy is written and whether there was fraud, errors or misrepresentations about health issues.

One way to avoid this is an incontestability clause. 

Suppose your life insurance policy has an incontestability clause. In that case, life insurance companies may not be able to deny payouts due to errors or misrepresentations on your application once the contestability period has passed.

What Happens If Suicide Occurs During the Waiting Period?

If suicide happens during the waiting period of a suicide clause, the life insurance company would not pay out the death benefit. 

In some cases, the life insurer may return the premiums paid.

Check your policy to see what would happen in this instance for your policy.

What Happens If Suicide Occurs After the Waiting Period?

If suicide happens after the waiting period of a suicide clause, the life insurance policy may pay out the death benefit.

The key is:

Make sure all other rules of the policy are being followed.

You’ll need to read over the policy carefully. Then, you can determine that no other rules may prevent a payout. 

If your life insurance company is denying a payout, it may be worth consulting a lawyer. They can look at your situation and your policy to see if you have a potential case or not.

The Type of Life Insurance You Have Could Impact the Results

Life insurance policies can work in different ways regarding suicide. Certain policies may cover suicide immediately. 

That said, policies that cover suicide immediately are normally limited to lower death benefit amounts.

Group life insurance paid by employer

In general, group life insurance benefits paid entirely by your employer don’t have a waiting period for suicide. That said, you should read the policy details to be sure.

These benefits are often relatively small. It is common for this benefit to offer a flat amount of coverage for all employees. 

In other cases, your employer may offer one to three times your salary in life insurance coverage.

Group life insurance paid by employee

Your employer may allow you to choose to purchase additional group life insurance. This coverage often has a waiting period before paying out for death by suicide. 

You can normally purchase a certain amount of additional life insurance through an employer’s group life insurance benefit without being subject to a medical exam.

Amounts above that threshold could require a more detailed application process.

Individually-purchased life insurance

Individually purchased life insurance usually has a suicide clause preventing payout in the first year or two of the policy for death by suicide.

This type of insurance is what is discussed in detail above.

Resources for Addressing Depression and Mental Health

Depression is a serious disease. Other mental health disorders can seriously impact you, as well. 

If you or someone you know is suffering from mental health issues, get in touch with someone that can help.

One way to get help is to speak with a local professional. You can schedule an appointment to discuss your concerns.

Another option is contacting the National Suicide Prevention Lifeline. They’re open 24 hours a day, seven days a week. You can call them at 800-273-8255.

If you’d prefer not to talk on the phone, you can also chat online by visiting their website.

You don’t have to be suicidal to use this resource. The website states you can contact them about the following, as well:

  • Substance abuse
  • Economic worries
  • Relationships
  • Sexual identity
  • Illness
  • Getting over abuse
  • Depression
  • Mental and physical illness
  • Loneliness

Summary

So does life insurance cover death due to suicide? It depends on your policy and how long you’ve had it. 

Many life insurance claims for suicidal deaths may be paid out.

Others could be denied during a suicide clause period or contestability period. 

If a claim is denied when a suicide occurs, read the policy carefully. Consider consulting a lawyer. 

A lawyer can examine your situation and your policy in detail. They can then help you figure out if you have any other options that may make the life insurance company pay the death benefit.

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