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The truth about suicide & life insurance

The latest studies from the National Center for Health Statistics indicate that suicide rates are growing at staggering rates here in the U.S., with a 35% increase between 1999 and 2018. 

Suicide is the event in which someone causes a self-inflicted injury resulting in death, but in reality, suicide has far-reaching impacts. It’s a confounding tragedy for those left behind, especially those forced to deal with the deceased’s estate after a devastating loss. When suicide is the cause of death, it has significant ramifications when it comes to life insurance.

According to the National Mental Health Institute, rates of suicide for women were most common for those between the ages of 45 and 54,  while among men the ages are more commonly 65 or older. These are age groups that are more likely to have life insurance, but what does that mean exactly? Will a person’s life insurance policy remain valid even if the face of suicide? Will your loved ones still receive their entitlements as beneficiaries of your life insurance policy? 

We will explore the answer to these and other questions in this article. 

When does life insurance cover suicide?

Sadly, suicide is all too common. The American Foundation for Suicide Prevention indicates it is the tenth leading cause of death for Americans, and along with self-injury, cost a total of $69 billion in 2015 alone. That’s why many life insurance policies have special terms in the fine print to account for suicide. 

Insurance companies typically require that you have an active policy for a minimum of one to two years, either through your own private policy or one provided by your employer. You may find that a portion of your paid premiums could be refunded to a beneficiary upon your passing via suicide. According to the American Council of Life Insurers (ACLI), 99% of all life insurance claims are paid in full, but you must be paid up premium-wise in full to receive benefits, whether suicide is the cause of death or not.

The Suicide Provision

Your life insurance policy will typically include something known as a suicide provision, or suicide clause. This outlines the specifics surrounding your coverage should you choose commit suicide. If suicide occurs before a policy’s exclusion limitation is reached, it’s possible the beneficiaries won’t receive benefits. This provision is typically valid for two years but could be vary, depending on your insurer. 

Other policies require that you report any issues regarding mental health or addiction. If you don’t, you could risk making your policy invalid. Insurance companies tend to be more forgiving of these issues when they surface after you have already purchased your policy. Depending on your provider, you may be protected from a rate increase if mental health is reported after insurance has been purchased. However, you may not be approved by a new provider if there is a history of mental illness. 

How your insurer handles mental health may vary, but it’s important to identify these limitations prior to the purchase of a policy. 

The Incontestability Clause 

The Incontestability Clause usually lasts about two years to ensure the validity of your policy, confirming things like the details provided on your application. After the defined period of time passes, the insurance company loses the ability to deny your claim due to an error in paperwork (under the assumption that the error was unintentional and not fraudulent in nature).

In some specific cases, there are exceptions to the incontestability clause, including:

  • Incorrect age or gender – while an insurer cannot deny a claim based on an incorrect age or gender provided by the policyholder, the rates may be adjusted to reflect the accurate age/gender. 
  • Short-term contestability – some cases allow insurers to define a period of 1-2 years that must pass prior to eligibility for payouts. This applies when the policyholder is mentally or physically unwell at the time of applying and passes away prior to the contestability period is over.
  • Evidence of willfully misleading or lying to your insurer – in the event of fraud, the incontestability clause does not apply to insurers and the policy may be voided.

In the event of suicide, it’s important to understand that the incontestability clause may have an impact on payouts.

Life insurance and depression

Before issuing a life insurance policy, underwriters look for several factors unique to each person, including health, age, personal and family medical history, approximate weight and lifestyle habits. In addition to physical wellness exams, insurers normally require you to disclose your medical history, including any mental health related conditions like anxiety, depression or stress. Your underwriter can also search your records to see what prescriptions or medications you took or currently are taking. 

It is always better to be upfront and honest about your medical conditions. Having an anxiety disorder or depression will not disqualify you from receiving life insurance, unless you are terminally ill and seen as too much of a risk. If your illness is under control with treatment and medication or if your depression is due to a specific life incident like postpartum depression, you will typically receive a better rating and lower premiums. 

Insurers will try to empathize as much as possible with your situation so it depends on each applicant’s circumstances. However, lying about your condition can result in a higher premium or your life insurance denying you a policy. Furthermore, in the event of death, your life insurance company could lower the benefit your family receives or even deny the claim.

Life insurance and physician-assisted suicide

Physician or doctor-assisted suicide is also known as “death with dignity,” which means terminally ill adults can receive lethal doses of medication from medical physicians to end their life. There are currently only eight states and Washington D.C. that have laws protecting the right to assisted suicide under the Death with Dignity Act. These states may not follow the contestability clause, and may provide payouts in the event of an applicant’s physician-assisted suicide.

In other states, life insurance policy payouts for physician-assisted suicides are similar to payouts for suicide. Most life insurance policies operate by a contestability clause which means that the insurance company will not pay out if the policyholder commits suicide within two years of purchasing life insurance. After two years have passed, however, the policy may pay out.

If you’re truthful on your application about your medical conditions, particularly if you have a terminal illness, then your life insurance company may or may not issue a policy. However, if you lie about your medical conditions, the policy can be voided due to fraud, resulting in no payouts — despite any premiums you may have paid. It’s far better to be honest and accurate if you wish to obtain a life insurance policy that will eventually provide your dependents with a death benefit.

How do life insurance payouts work for suicide?

Before a policy is issued, a life insurance company will first conduct an analysis of your physical and mental health. This is a part of the underwriting process and will include several questions regarding your current and past health. 

Conditions like depression help them determine your risk of death or injury, and while it is not likely going to result in denial of coverage, proof of treatment and medication will help insurers feel more comfortable about insuring you despite pre-existing issues with depression and mental health. If you do not disclose these conditions in advance, an insurance company could have grounds to deny payouts in the event your death is self-inflicted.

Individual policies vs. group policies

If you receive your life insurance from an employer-provided policy, you could skip the suicide provision and be guaranteed full coverage regardless of death of suicide. Most employee policies do not assign suicide provisions to corporate life insurance policies, so in theory, your loved ones would face a far easier claims process than they would with a privately-held policy.

That doesn’t mean that there won’t be some limitations. Most corporate policies require a waiting period similar to individual policies, usually lasting one or two years after purchase.

Your human resources department is typically the appropriate party to assist with coverage and claims, but management can also help provide guidance and instruction regarding your group policy.

Contesting life insurance claims denial

Regardless of the cause of death, insurance companies may try to deny your death benefits to your beneficiaries. Many people are familiar with Heath Ledger, the Academy Award-winning actor who died in his early twenties back in January 2008. Although the New York Medical Examiner declared the official cause of death as acute intoxication, his $10 million policy was denied on the grounds of “suspicious death.” It took a long, drawn-out trial for Ledger’s daughter Matilda to receive just a fraction of her father’s estate.

Another example involves Montana widow, Jane Pierce, who was denied benefits from her husband’s policy due to confusion over his medication. The insurance company saw certain drugs in his system, and though they were a result of his chemotherapy treatment, the insurance company claimed that it was a botched suicide attempt and refused to pay benefits to his widow. It took a lawsuit for Pierce to receive nearly a quarter of a million dollars, but the insurance company never admitted any wrongdoing, and Pierce never received interest on the delayed funds. 

Insurance companies have a reputation for cutting costs in any way possible, so your beneficiaries may be in for an uphill battle if they want to receive anything from your estate in the event of your suicide.

The takeaway

Suicide is not necessarily a deal-breaker for your life insurance policy, but always check the fine print.

  • Suicide rates have increased each year in the U.S.
  • Many life insurance companies prepare for the possibility for suicide in their policies.
  • The Suicide Provision usually lasts about two years and voids any life insurance benefits if a suicide is committed within that time.
  • The Incontestability Clause is a short period where your insurer can contest any information provided on your application. 
  • Depression and mental health will be a key part of the underwriting process and can determine your rates and coverage.
  • Group policies from employers often do not include the Suicide Provision.
  • Ultimately, beneficiary payouts are determined on a case-by-case basis when suicide is involved.

Most life insurance policies will still offer payouts despite suicide. However, it’s often a long, complicated process that can add to already-burdened beneficiaries. Benefits may be reduced or even denied altogether, leaving your loved ones without any form of support. Take the time to review your policy with your beneficiaries, so they are familiar with the intimate details and limitations involving your life insurance policy. This is critical knowledge to have in case there is an issue with the approval of your claim.  

Life insurance and suicide FAQs

Does life insurance cover death by suicide?

Most life insurance policies have a “suicide clause.” This means that if the policyholder commits suicide within the first two years of the policy, then the beneficiaries will not receive the pay out. This can vary by state, however.

Will I be denied life insurance if I have depression? 

You will not necessarily be denied life insurance if you have depression, unless you are terminally ill and are considered too much of a risk. Most insurers will try to empathize with the policyholder, so qualifying for coverage largely depends on the nature of your depression, your medical history, whether you’re receiving treatment and the circumstances that resulted in your depression. It is always best to be honest about your medical conditions to avoid complications down the road.

How does the incontestability clause affect suicide and insurance? 

Under the incontestability clause, the applicant must hold the policy for two years to ensure the validity of your policy. After two years have passed, the insurance company loses the ability to deny your claim due to misrepresentation or concealment in paperwork. If a policyholder commits suicide after two years, the insurance company will normally pay out under the incontestability clause.

How does physician-assisted suicide affect life insurance payouts? 

Life insurance payout conditions for physician-assisted suicides are typically similar to payouts for suicide. Most life insurance policies operate by a contestability clause which means that the insurance company will not pay out if the policyholder commits suicide within two years of purchasing life insurance. After two years have passed, however, the death benefit is typically valid.

If you or someone you know is experiencing feelings of depression or having thoughts of suicide, there is help that can provide support and help you find renewed meaning in life. Explore the many widespread resources of organizations like the CDC Suicide Prevention Center, the National Council on Alcoholism and Drug Dependence (NCADD), and the Substance Abuse and Mental Health Services Administration (SAMHSA), all of which can help you and your family get through the dark times and find the light of life again.

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