While there are no easy answers when a loved one dies by suicide, one question you may be unsure of is whether their life insurance policy is still valid. In some cases, yes, beneficiaries can still receive a life insurance payout if the policyholder dies by suicide. However, there are exclusions that may invalidate this type of claim. Bankrate breaks down how life insurance policies work in these instances to help you navigate this difficult time.
Does life insurance cover suicide?
Finding out if life insurance does cover suicide is a delicate and often misunderstood one. While it’s challenging to think about, understanding how your life insurance policy handles such situations is crucial for ensuring that your loved ones are protected. Whether or not a life insurance policy covers suicide largely depends on the type of policy you hold and the specific terms within it.
Many life insurance policies include a “suicide clause,” which typically states that if the policyholder dies by suicide within a certain period after the policy is issued — usually within the first two years — the insurer may deny the death benefit or only return the premiums paid. However, after this exclusion period, most life insurance policies do cover suicide, and beneficiaries would be entitled to receive the full death benefit. If a policy does not include a suicide exclusion clause, the insurance company is required to pay the full death benefit if the insured dies by suicide, premeditated or not.
It’s important to note that different types of life insurance policies may have specific clauses and conditions that impact coverage in these unfortunate circumstances. Below, we’ll explore how various policy types address suicide coverage, providing you with a clearer understanding of what to expect from your life insurance.
Military life insurance
Some military-focused life insurance policies, like ones offered by Veterans’ Group Life Insurance (VGLI) and Servicemembers’ Group Life Insurance (SGLI), are unique in that they typically pay out the death benefit to the insured’s beneficiaries regardless of the cause of death. Meaning even if the insured dies from an act of war or by suicide, their life insurance policy may still pay the death benefit.
Accidental death insurance policy
This can be a bit of a gray area. Whether or not accidental death is covered by a life insurance provider generally depends on two things: the circumstances of the death and what the insured discloses with their life insurance provider when they complete their policy application. For instance, if the insured dies from a prescription drug overdose but disclosed to their insurance provider that they took prescription drugs when they first applied for their policy, the beneficiaries may still receive the death benefit. However, death by illegal drug overdose is typically not covered.
Group life insurance
Group life insurance policies, often provided as part of an employee benefits package, usually include similar suicide clauses to those found in individual life insurance policies. If the suicide occurs within the exclusion period, the death benefit may not be paid. However, after this period, group life insurance generally does cover suicide.
Traditional life insurance policy
Traditional life insurance policies, including term and permanent life insurance, typically contain a suicide clause that applies for a specific period. After this period expires, the policy generally covers suicide, ensuring that the death benefit is paid to the beneficiaries.
What is a life insurance suicide clause?
A life insurance suicide clause is a critical detail that can have significant implications for beneficiaries. This clause typically applies for the first one to two years after a policy is issued, depending on the insurer and state regulations. During this period, if the policyholder dies by suicide, the insurer may limit or deny the death benefit payout. Instead of paying out the full death benefit, the insurer might only return the premiums paid up to that point.
This clause is intended to protect the insurance company from financial risk by preventing an individual from taking out a policy with the intention of ending their life shortly afterward. The exact duration of the suicide clause can vary. For instance, while most states enforce a standard two-year period, some, like Missouri, Colorado and North Dakota, have shorter periods of one year, as highlighted by Munich RE Life.
It’s beneficial for policyholders to be aware of this clause because it directly affects whether their beneficiaries will receive the intended financial support or not. After this exclusion period ends, the life insurance policy generally covers suicide, ensuring the beneficiaries receive the full death benefit as outlined in the policy.
What is a life insurance incontestability clause?
The incontestability clause is a key provision that activates after a life insurance policy has been in force for a specific period, typically two years. Once this period ends, the insurer generally cannot deny a claim based on errors or omissions in the application, except in certain cases of fraud. This means that after the initial contestability period, the insurer no longer has a right to investigate for misrepresentation during the application process and must pay out the death benefit proceeds.
In contrast to the suicide clause, which specifically addresses the circumstances of the policyholder’s death, the incontestability clause focuses on the accuracy of the information provided when the policy was purchased. This clause ensures that policyholders and their beneficiaries have added security, knowing that their coverage cannot be easily contested after the initial period.
How do life insurance payouts work for suicide?
After the exclusionary period, life insurance will typically pay for suicidal death just as it would for death from any other insurable cause.
A policyholder’s suicide during the exclusionary period provides no payout of the death benefit. Very often, however, life insurers pay out the amount of premiums paid on the policy minus any premiums owed before the policyholder’s death. Insurers can also subtract loan amounts from any death benefit payout on permanent policies.
What to do if your life insurance claim is denied
If your life insurance claim is denied, particularly in cases involving suicide, it’s helpful to understand the insurer’s reasoning and the steps you can take to challenge the decision. Typically, denials may 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 Life study highlights the complexity of such claims, noting that a thorough investigation is often required, one that may go beyond just reviewing the death certificate.
According to the Munich Re study, claims investigators might need to gather extensive documentation, including police reports, autopsy findings and medical examiner reports, to confirm the cause and manner of death. These steps ensure that the insurer makes a fair and accurate determination, as discrepancies or insufficient evidence can lead to a claim being wrongly denied.
To contest a denial, start by carefully reviewing the insurer’s denial letter and gathering any relevant documentation, such as the insured’s medical records or investigative reports. Understanding your rights under state laws, which may offer protections or specific recourse, is also vital. The study underscores the importance of remaining objective and diligent throughout the appeals process. Consulting with an experienced attorney or insurance professional can further bolster your efforts to reverse a denial and secure the benefits owed to you.
Can I get life insurance with a history of attempted suicide?
When dealing with the sensitive issue of suicide and life insurance, it’s important to know that obtaining life insurance after a history of attempted suicide is possible. However, it may come with specific challenges.
If you have a history of attempted suicide, getting life insurance coverage can be more difficult, but it’s not out of reach. Insurers evaluate the risk of insuring someone based on their medical and personal history, including mental health. Here’s how this might affect your life insurance options:
- Table ratings: These are extra costs added to your standard premium based on the insurer’s assessment of your risk. A higher table rating means higher premiums, reflecting the increased risk the insurer perceives due to your history.
- Flat extras: Unlike table ratings, flat extras are specific dollar amounts added to your premium. This additional charge accounts for the insurer’s perceived risk of insuring someone with a history of attempted suicide. The flat extra may be permanent or temporary for a certain number of years.
Some other factors to consider include:
- Time since the attempt: The more time that has passed since the suicide attempt, the better your chances of getting coverage. Insurers often look for stability in your mental health over several years.
- Current mental health status: If you’ve been stable and treatment-free for a period, this can positively influence the insurer’s decision.
- Specialized insurers: Working with an insurance professional who specializes in high-risk cases can improve your chances of finding the right coverage.
Resources if you or a loved one is struggling
If you or a loved one is struggling with suicidal thoughts, know that you are not alone and help is available. Reaching out to trusted professionals and organizations can provide support and guidance during difficult times. Here are some resources that can help:
- National Suicide Prevention Lifeline: Call 988 for 24/7 confidential support from trained counselors who can help you through a crisis and connect you to local resources.
- Crisis Text Line: Text HOME to 741741 to reach a crisis counselor via text message. This service is available 24/7 for anyone in the United States.
- Veterans Crisis Line: For veterans, service members and their families, call 988 and press 1, or text 838255 to connect with responders who understand military life challenges.
- The Trevor Project: Specifically for LGBTQ+ youth, you can call 1-866-488-7386, text START to 678-678, or chat online at The Trevor Project’s website for confidential support.
Remember, reaching out for help is a sign of strength. If you or someone you know is struggling, these resources can provide the support needed to navigate through tough times.
Frequently asked questions
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The best life insurance policy will depend on the needs of each individual policyholder. Term life policies provide coverage for short periods of time, typically between five and 30 years. Whole life and other permanent insurance policies, on the other hand, typically provide coverage through the end of the insured’s life as long as premiums are paid. Talking to an insurance agent or financial planner may help you determine the best coverage type for your needs.
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Life insurance policy premiums can often be paid monthly, quarterly, semi-annually or annually. Different insurers offer a variety of plans. The cost of life insurance varies depending on each policyholder’s specific circumstances and the amount of coverage they choose.
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If a person is deemed terminally ill, they may have the option to legally and voluntarily end their life on their own terms. Although “death with dignity” is allowed in several states, it could still be deemed a suicide by a life insurance provider if it occurs during the exclusionary period. In this instance, it is best to review the insured’s policy in-depth and contact a licensed life insurance agent to verify if the policy will pay out a death benefit in these circumstances.
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