Does Life Insurance Cover Suicide?
What to Expect From a Life Insurance Policy
It is estimated that there are more than 5.4 million survivors of suicide loss in the U.S., one of the most painful situations to deal with. Losing someone you love, and all the questions that come with that loss are extremely difficult to face. Having to deal with a denied life insurance claim due to suicide is an added devastation. Here's what you need to know about life insurance and what you can expect from your life insurance policy if the cause of death is suicide.
Does Life Insurance Pay After a Suicide Death?
Depending on when a life insurance policy was purchased, life insurance may still pay out the death benefit to the beneficiary after a suicide. As a rule of thumb, if a life insurance policy is purchased within two years before the suicide, the death benefit may not be paid. We'll cover everything you need to know to help you understand if a life insurance company will still pay the death benefit when the cause of death is suicide.
In 2018, there were over 48,000 deaths by suicide. Suicide is shocking and often unforeseen by the people left behind. It is a devastating tragedy. Naturally, it would only be fair that family members left behind by an act of suicide should be able to benefit from the life insurance policy. However, in order to do so, certain conditions must be met to allow a payout from the contract.
How Life Insurance Policies Work For a Suicide Death Claim
The insurance company may (or may not) pay the beneficiary of a life insurance policy in the event of suicide depending on the circumstances. The primary factors that influence the eligibility for payout in a suicide situation would be the existence of two clauses found in a life insurance policy:
- The suicide provision
- The incontestability clause
These clauses are meant to deter people from only buying a policy because they want to leave money to their family after a suicide or planned death.
The Incontestability Clause
With the incontestability clause, the insurance company may contest and deny a claim for several reasons, one of them being suicide.
The incontestable clause in a life insurance policy is a key reason that a claim would be denied by a life insurance company in the first two years of a policy being purchased. According to the National Association of Insurance Commissioners (NAIC), this may include following a death by suicide. The incontestability clause allows the life insurance company to deny a claim during the contestability period. The contestable period outlined in the clause is usually for a term of two years following the initial date the insurance policy coverage first started. Once the term of the incontestability clause has passed, then a life insurance claim becomes "incontestable" with the exception of very serious issues like fraud or misrepresentation.
You should contact your life insurance representative to find out the exact details of your policy and how long the clause lasts in your specific situation.
If the policy has been in force less than two years during the contestable period of the life insurance policy, then an insurance company may investigate the claim and deny the claim for life insurance if suicide is the cause of death according to the NAIC.
In addition to the incontestability clause, a life insurance policy may also have a suicide provision or clause.
The Suicide Provision
The suicide provision addresses the terms and conditions of payouts, or exclusions due to suicide specifically. It often also comes with a two-year time frame for the exclusion of payout due to suicide. If your policy contains the suicide clause, then a claim may be denied per the conditions of the clause which usually states that no death benefit will be paid if the insured dies by suicide or if suicide is the cause of death.
At the time you purchase a life insurance policy, your insurance representative has an obligation to explain all of these clauses and policy conditions to you, as well as other exclusions in your life insurance policy as part of the purchasing process.
Suicide Provision vs. Incontestability Clause
The suicide provision and the incontestability clause are not the same. The incontestability clause is broader and deals with the insurer's ability to contest or deny a life insurance claim during the contestability period. Other reasons besides suicide may include the following, among others:
- Death during an illegal act
- Misrepresentation of information
- Potential "drug abuse and alcohol" clauses
It is very important to get the exact specifics of the life insurance policy purchased when signing a life insurance contract so that you don't end up with surprises, or have a claim denied. Be sure and ask about the specifics.
When Does a Life Insurance Policy Pay Out for Suicide?
After the suicide provision period, or the contestability period is over—which is usually two years from the date of purchase of a new policy—a life insurance policy may pay the death benefit in a claim for suicide to the beneficiaries. To understand your policy terms, you can also check the policy's exclusions section, since the suicide provision can be different for each policy.
If there is no exclusion or clause in effect at the time of death that excludes suicide, then the life insurance policy will pay out the benefit even if the cause of death is suicide.
For example, John and Mary purchased a 10-year term life insurance policy when they got married. They paid their premiums and kept the same policy in force.
Five years later, Mary was diagnosed with depression. Although she was in treatment and had been doing well, one day, much to the family's shock, they discovered she had died from suicide. John was devastated. Family members helped him get all of Mary's affairs in order and discovered their life insurance policy.
Although the money did not help with his devastating loss, the family was surprised and reassured when they found out that the insurance company would pay the life insurance claim, even though the cause of death was due to suicide, because the suicide provision no longer applied.
How Does It Work When an Insurance Company Denies a Claim After Suicide?
Let's look at a different example.
Jeff had kept a life insurance policy for 20 years. When it came time to renew his policy, he decided that since it had been 20 years, the same life insurance company may now offer a better policy, so he did some investigating and switched to another kind of policy from the same life insurance company. A year later, he died by suicide. Because he had switched his life insurance policy the contestability period had reset, and the suicide provision now applied. His family was denied being paid.
What If It Was Accidental?
There's yet another example of a situation where an insurance company assessed a death as a suicide but then it was later determined that the cause of death was accidental. Todd Pierce had been diagnosed with skin cancer in 1999. Ten years later, Todd was on a road trip and he was involved in a fatal car accident. The insurance company labeled the accident as suicide and wanted to deny the claim.
Todd's wife Jane could not believe that they were calling his death a suicide. She decided to obtain the help of a lawyer, and as a result, the insurance company ended up settling with her, and not going to court. Most people do not have access to a lawyer at a reasonable cost. In addition to the devastating circumstances of suicide, they often give up and do not necessarily try and fight the denial of a life insurance claim due to suicide.
In this case, Mrs. Pierce was brave and fought for her settlement. This is a rare exception, and most life insurance claims are paid without a problem. However, this is a good example of a situation where a claim may have been denied due to policy wordings, clauses, and exclusions. Thankfully, the beneficiary was able to get legal counsel.
- If you or someone you know is suffering from depression or mental health issues, or just having a hard time, the most important thing you can do is get help now. You are not alone in your struggle.
- If you are a survivor of a family member's suicide, you are among millions of people in the U.S. Don't be afraid to reach out to organizations for help as you are also not alone in this.
Association of American Suicidology. "Facts and Statistics." Accessed Sept. 17, 2020.
AARP Life Insurance Program. "Understanding the Two-Year Contestability Period for Life Insurance." Accessed Sept. 17, 2020.
NAIC. "Denied and Resisted Life Insurance Claims: Recommended Changes to Schedule F," Page 3. Accessed Sept. 17, 2020.
International Risk Management Institute, Inc. "Incontestable Clause." Accessed Sept. 17, 2020.
American Safety Council. "The Suicide Provision." Accessed Sept. 17, 2020.
NAIC. "Denied and Resisted Life Insurance Claims: Recommended Changes to Schedule F," Page 12. Accessed May 8, 2020.