There’s no easy answer when a loved one commits suicide, but you may not know if your life insurance is still in effect. In some cases, beneficiaries can receive life insurance proceeds even if the policyholder commits suicide. However, there are exclusions that can invalidate this type of claim. Bankrate breaks down how life insurance works in these cases and can help you get through this difficult time.
Does life insurance cover suicide?
Knowing whether life insurance covers suicide is a delicate issue and one that is often misunderstood. It can be a difficult thing to think about, but understanding how life insurance deals with such situations is important to protect your loved ones. Whether or not life insurance covers suicide depends largely on the type of policy you have and the specific terms within it.
Many life insurance policies contain a “suicide clause” which typically provides that if the policyholder commits suicide within a certain period after the policy is issued (usually within the first two years), the insurance company may refuse to pay the death benefit or may only refund the premiums paid. However, after this exclusion period, most life insurance policies will cover suicide and the beneficiary will be entitled to the full death benefit. If the policy does not contain a suicide exclusion, the insurance company is obligated to pay the full death benefit if the insured commits suicide (whether planned or not).
It is important to note that depending on the type of life insurance you have, there may be specific clauses and conditions that affect coverage in these unfortunate circumstances. Below, we explain how different policy types address suicide coverage, giving you a clearer understanding of what to expect from your life insurance.
Military Life Insurance
Some life insurance policies for military personnel, such as Veterans Group Life Insurance (VGLI) and Military Group Life Insurance (SGLI), are unique in that they will pay a death benefit to the insured’s beneficiaries regardless of the cause of death, meaning that the life insurance policy may still pay a death benefit if the insured dies as a result of an act of war or suicide.
Fatal Accident Insurance
This is where it gets a little murky. Whether a life insurance company will cover an accidental death generally depends on two factors: the circumstances of the death and what the insured disclosed to the life insurance company when applying for insurance. For example, if the insured dies from a prescription drug overdose, the beneficiary may be able to collect the death benefit if the insured disclosed to the insurance company that they were taking prescription drugs when they first applied for insurance. Deaths caused by illegal drug overdoses, however, are generally not covered.
Group Life Insurance
Group life insurance, often offered as part of employee benefits, usually includes a suicide clause similar to that of individual life insurance. If the suicide occurs within the exclusion period, death benefits may not be paid. However, after this period, group life insurance usually covers suicide.
Traditional Life Insurance
Traditional life insurance policies, such as term life insurance and permanent life insurance, usually contain a suicide clause that applies for a specific period of time. After this period has passed, the policy usually also covers suicide and will pay a death benefit to the beneficiary.
What is a suicide clause in a life insurance policy?
A life insurance suicide clause is an important detail that can have significant consequences for your beneficiaries. The clause typically applies for the first one to two years after the policy is issued, depending on the insurance company and state regulations. If the policyholder commits suicide during this period, the insurance company may limit or refuse to pay the death benefit. Instead of paying the full death benefit, the insurance company may only refund premiums paid up to that point.
The clause is intended to protect insurance companies from financial risk by ensuring that individuals do not intend to commit suicide immediately after taking out a policy. The exact duration of suicide clauses varies: for example, most states have a standard two-year period, but some states, such as Missouri, Colorado and North Dakota, have periods as short as one year, as highlighted by Munich RE Life.
It is beneficial for policyholders to be aware of this clause, as it directly impacts whether or not the beneficiary will receive the financial support intended. After this exclusion period has expired, life insurance policies usually provide coverage for suicide, ensuring that the beneficiary receives the full death benefit provided for in the policy.
What is a no contest clause in life insurance?
A no-dispute clause is an important clause that kicks in after a life insurance policy has been in effect for a certain period of time, usually two years. After this period has expired, the insurance company generally cannot deny a claim due to errors or omissions in the application, except in certain cases of fraud. This means that after the initial no-dispute period, the insurance company no longer has the right to investigate whether any misrepresentations were made during the application process and must pay the death benefit.
In contrast to suicide clauses, which specifically address the circumstances of the policyholder’s death, no-dispute clauses focus on the accuracy of the information provided when purchasing the policy. This clause gives policyholders and their beneficiaries added peace of mind, as they will not be able to easily contest their coverage after the initial period.
How does life insurance pay out in the case of suicide?
After the exclusion period, life insurance policies will generally pay for death by suicide as well as death from other insured causes.
If the policyholder commits suicide during the exclusion period, no death benefit is paid. However, life insurance companies often pay the premiums paid before the policyholder’s death, minus any outstanding premiums. Insurance companies can also deduct the amount of the loan from the death benefit payment of a whole life policy.
What to do if your life insurance claim is denied
If your life insurance claim is denied, especially if suicide is involved, it’s helpful to understand the insurer’s reasons and the process for appealing the decision. Typically, denials can occur if the death falls within the policy’s suicide exclusion period, which can range from one to two years depending on state regulations. The Munich Re study highlights the complexity of such claims, noting that they often require a thorough investigation that may go beyond simply reviewing the death certificate.
According to a Munich Re study, claims adjusters may need to collect extensive documentation, such as police reports, autopsy findings and coroner’s reports, to verify the cause and circumstances of death. These procedures ensure that insurers can make a fair and accurate determination, as inconsistencies or insufficient evidence could result in claims being wrongfully denied.
To contest a denial, start by carefully reading the insurance company’s denial letter and gathering any relevant documentation, such as the insured’s medical records and investigation reports. It is also important to understand your rights under state law, which may provide protections and specific remedies. This research highlights the importance of remaining objective and honest throughout the appeal process. Consulting with an experienced attorney and insurance professional can further strengthen your efforts to overturn the denial and secure the benefits due to you.
Can I get life insurance if I have attempted suicide?
When dealing with the sensitive issue of suicide and life insurance, it is important to know that it is possible to obtain life insurance even if you have a history of suicide attempts, although this may come with certain challenges.
If you have a history of suicide attempts, it may be harder to get life insurance coverage, but not impossible. Insurance companies assess the risk of insuring you based on your medical and personal history, including your mental health. Here’s how this may affect your life insurance options:
- Table rating: These are extra costs added to your standard premium based on the insurance company’s risk rating. The higher the rating on the table, the higher the premium, reflecting the increased risk the insurance company perceives based on your history.
- Flat Extra: Unlike a fixed premium, a flat-rate premium is a specific amount added to your premium. This additional charge reflects the insurance company’s recognition of the risk of insuring someone with a history of suicide attempts. A flat-rate premium can be permanent or temporary for a set period of time.
Other factors to consider are:
- Time since attempt: The longer it has been since your suicide attempt, the better your chances of receiving compensation. Insurance companies often place a premium on several years of mental stability.
- Current mental health status: If your condition has been stable and you have not received any treatment for a period of time, this may have a positive impact on the insurance company’s decision.
- Specialist Insurance Companies: Working with an insurance professional who specializes in high-risk cases will increase your chances of finding the right coverage.
Resources if you or a loved one is suffering
If you or a loved one are struggling with suicidal thoughts, please know that you are not alone and that help is available. Reach out to trusted professionals and organizations that can provide support and guidance during these difficult times. Here are some resources that can help:
- National Suicide Prevention Lifeline: Call 988 to receive 24/7 confidential support from trained counselors who can help you get through the crisis and connect you to local resources.
- Crisis Text Line: To reach a crisis counselor via text message, text “HOME” to 741741. This service is available 24 hours a day, 7 days a week to anyone in the U.S.
- Veterans Crisis Line: Veterans, service members and their families can call 988 and press 1 or text to 838255 to connect with responders who understand the challenges of military life.
- The Trevor Project: LGBTQ+ youth in particular can receive confidential support by calling 1-866-488-7386, texting “START” to 678-678, or chatting online at The Trevor Project’s website.
Remember, asking for help is a sign of strength, and if you or someone you know is struggling, these resources can provide the support you need to get through tough times.
