Does Life Insurance Cover Suicide?

Suicide is a complex subject that many families have to face after losing a loved one. It can be especially devastating if the person who passed had life insurance, only for the family to find out that suicide is not covered. This can leave them scrambling financially on top of grieving their loss.

That’s why it’s so important to understand the intricacies of how life insurance policies deal with suicide. Many nuances, clauses, and legal regulations determine if a payout will occur after a suicide death. Having this knowledge beforehand provides financial awareness so families can be prepared.

Equiping yourself with information is the best way to navigate the sticky situation of life insurance and suicide.

Suicide Clauses in Life Insurance Policies

Life insurance policies have special provisions called “suicide clauses” that dictate if and when a payout will occur in the event someone takes their own life.

The timeframe and coverage stipulations vary significantly between insurance companies and policy types.

What Triggers the Suicide Clause

In general, the suicide clause is activated if the policyholder dies by what the county coroner or medical examiner declares to be an “intentional self-inflicted injury.” This includes:

G*nshot wound
Overdose on legal or illegal drugs
Asphyxiation
Jumping from a building or cliff (to the demise of the jumper)
Slitting one’s wrists
Carbon monoxide poisoning

It’s important to note that high-risk behaviours like reckless driving, drug use, or combat situations are not considered suicide. There would need to be explicit evidence or a determination of deliberate intent to end one’s life.

Policy Types and Suicide Clauses

Clauses around suicide vary greatly depending on the type of life insurance policy:

Term Life Insurance

Since term life insurance is only valid for a specific period (the “term”), the suicide clause tends to be much more restrictive. Most term policies will not pay out if the insured dies by suicide within 1-2 years of the policy start.

Whole Life Insurance

Because whole life insurance is designed to provide lifelong coverage, the suicide clause is generally more lenient. Many whole-life policies will pay out for suicide so long as a certain amount of time has passed since the initiation of the policy, such as 3-5 years.

Universal Life Insurance

With flexible premiums, universal life insurance lands between whole and term. The suicide clause is similar to the entire, where a waiting period must elapse before a payout, usually 2-3 years.

Group Life Insurance

For employer or organization-sponsored plans, group life insurance often waives the suicide clause. However, policy specifics should still be reviewed closely.

As evidenced above, there can be significant differences in suicide coverage depending on the carrier and life insurance product. Checking the fine print is imperative.

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Standard Exclusion Period for Suicide

The window of time following the activation of a life insurance policy where suicide is not covered is known as the “exclusion period for suicide.” This is the waiting period before the suicide clause goes into effect to allow a payout.

Why Is There an Exclusion Period?

Insurance companies implement exclusion periods because of something called “adverse selection.” This refers to when policyholders purposely hide health conditions or high-risk behaviours from the insurer to pay lower premiums.

The exclusion period allows some time to elapse, where the policyholder pays into the policy before being able to collect a payout from suicide. This prevents people from quickly getting life insurance to end their lives while their family is involved intentionally.

What Is the Typical Timeframe?

While exclusion periods vary, they generally fall into the following timeframes:

Term Life Insurance – Between 12-24 months
Whole Life Insurance – Between 36-60 months
Universal Life Insurance – Between 24-36 months

Some policies only have a 1-year exclusion, while others have a 5-year window before the suicide clause takes effect. Carefully reading the fine print is crucial to understanding your particular insurer’s timeframe and policy.

Exceptions to the Suicide Exclusion Period

While suicide clauses and exclusion periods are par for the course, there are certain exceptions where they may not apply or may be reduced. Common exceptions include:

Prior Coverage Exception

The new insurer will sometimes waive or reduce the exclusion period for people switching life insurance carriers but maintaining continuous coverage. This prevents penalizing customers for shopping at their rate.

Policy Conversion Exception

The exclusion period often disappears or shortens if you convert a term life insurance policy to a whole life (with the same carrier). It gets treated similarly to continuous coverage.

Contract Specified Exceptions

Some policies explicitly state notable exceptions to their suicide clauses, like “if the policyholder is mentally incapacitated” or “if death occurs in an ambulance.” While morbid, it pays to understand special clauses.

Exclusion Expiration Exception

Perhaps the most apparent but easy-to-forget exception is that if the insured dies by suicide AFTER the exclusion period has expired, the policy must pay out per the terms outlined in the contract.

While limited, being aware of potential exceptions can make all the difference for your loved ones if an unexpected tragedy occurs.

Insurance Company Investigations into Suicide

Given how much money is at stake with life insurance claims, you better believe insurance companies thoroughly investigate suspected suicide deaths. The burden of proof required leaves little to chance.

What Evidence Do Insurance Companies Require?

Standard documents and information collected by insurance investigators include:

The police report from the responding officer(s)
Autopsy records citing manner of death
Toxicology report showing drugs, alcohol, and poisons present at the time of death
The medical examiner or coroner’s official determination
Doctor, psychologist, and therapist medical records, if applicable
Note or messaging left by the deceased party
Statements from relatives or friends indicating the dead mental state or comments made

They may even assign private investigators to look into the death circumstances more deeply. It’s quite an exhaustive process.

Who Determines the Cause of Death?

While the insurance Company conducts their review, the policyholder’s official manner of death is decided by the county coroner or a medical examiner in the location where the death occurred.

This governing body has the final say based on factual evidence collected at the death scene and during an autopsy. The insurer primarily relies on the coroner or examiner’s report to support approving or denying the claim.

Reasons a Life Insurance Claim May Be Denied for Suicide

Despite the thorough investigative process by life insurance companies, claims are not automatically approved in all suicide cases. Some scenarios are likely to result in a denial of policy death benefits.

Suicide Occurs During Exclusion Period

If the insured dies by suicide within the policy’s documented exclusion period, the claim will undoubtedly be denied.

Breaching this timeframe voids the insurer’s requirement to pay out on a self-inflicted death until the stipulated period passes.

Undisclosed Medical History

Failing to disclose mental health conditions like depression or a previous suicide attempt is grounds for a denied claim.

Insurance firms can argue the applicant intentionally hid pre-existing medical facts that may have deemed them ineligible for coverage.

Evidence of Deliberate Intent

For high-risk deaths with unclear circumstances, if the medical examiner believes evidence clearly shows deliberate suicide intent, it strengthens the case for the insurer denying the claim.

Contract Terms Excluding Self-Harm

Some policies include additional stipulations beyond just the suicide clause to avoid paying out for reckless or dangerous behaviour that threatens one’s safety. Risky hobbies, drug use, refusing medical treatment – self-harm in many forms may void a policy.

As you can see, insurance companies have covered their bases legally to ensure they minimize payouts for suicide deaths whenever possible. This underscores the value of closely evaluating policy terms.

Military and Veteran Life Insurance Policies

Military members who pass away due to suicide have separate life insurance guidelines, given the increased rates of PTSD and mental health conditions from traumatic combat events.

Coverage for Active Duty Under SGLI

The government-sponsored Servicemembers’ Group Life Insurance (SGLI) provided to all active and reserve military personnel covers death by suicide with no exclusion period. This acknowledges the extreme stresses placed on troops.

SGLI has a maximum benefit of $400,000. For deaths explicitly in the line of duty, an additional $100k is paid out under a policy called Traumatic SGLI.

Coverage for Veterans Under VGLI

When military members transition to civilian life, they can convert their SGLI policy to Veterans Group Life Insurance (VGLI). Like its predecessor, VGLI offers full coverage for suicide.

Policies max out at $400,000 for deaths under any circumstance, and it remains renewable every five years with no termination age.

Private Insurance Alternatives

In addition to the government-sponsored options, private life insurance tailored to veterans and military members is also available. These policies should be evaluated closely for suicide clauses, just like civilian policies.

Given the increased suicide risk among veterans and active duty personnel, military life insurance policies offer reliable financial security without exclusion should the worst occur. Most civilian life policies do not compare.

What Legal Recourse Options Exist for Beneficiaries?

Despite all of the roadblocks outlined regarding life insurance not covering suicide, what happens if a claim is unexpectedly denied and funds are urgently needed? Are there any legal solutions?

Beneficiaries and family members can appeal denials or prompt insurance companies to act pretty, though limited.

File a Complaint with Your State Department of Insurance

Each state government has a Division or Department of Insurance (Department of Financial Regulation Services) to represent consumer interests. Filing a formal complaint can sometimes resolve claim disputes with an insurer, especially if unfair practices are suspected.

Claim Bad Faith Against Your Insurer

In legal terms, “bad faith” implies unfair dealings, such as unwarranted delays in claim processing or unreasonable denials. If malintent or negligence can be demonstrated, suing for lousy faith may force an insurer to pay the death benefit. However, court cases can be lengthy, costly affairs.

Consult an Insurance Claims Attorney

Speaking with an attorney specializing in denied insurance claims helps uncover whether legal grounds exist to dispute the insurer’s decision. While not guaranteed, hiring representation may be the necessary catalyst to receive owed benefits.

Appealing denied claims directly or pursuing legal action places a considerable burden on families already reeling from the pain of losing someone to suicide. However, it may be the only viable path to secure much-needed financial support in some cases.

Most common reasons for buying life insurance

Family Protection: Life insurance provides financial security for your loved ones in case something happens to you, ensuring they are provided for even if you are no longer there to support them
Mortgage Protection: If you have outstanding debts like a mortgage, life insurance can help cover these financial obligations, ensuring that your family can continue to meet these payments in your absence
Income Replacement: Life insurance can replace lost income, especially if you are the primary breadwinner in your family, helping to maintain their standard of living and cover everyday expenses, such as childcare and education costs
Caregiving Responsibilities: If you are taking on caregiving responsibilities for ageing parents or other dependents, life insurance can provide financial support to ensure their care continues even if something happens to you
Inheritance Tax Planning: Life insurance can be used to cover potential inheritance tax liabilities, ensuring that your beneficiaries receive the intended inheritance without being burdened by hefty tax bills
Funeral Expenses: Life insurance can help cover funeral costs, which can be a significant financial burden on your loved ones if not planned for in advance

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Keynotes

As you now know, the combination of life insurance and suicide can be complicated depending on policy types, legal clauses, insurer investigations, and state regulatory provisions. Here are some key takeaways when reviewing coverage:

Carefully read your policy’s suicide clause details, especially any exclusion period timespan
Note policy exceptions or provisions that may override the exclusion period
Double-check group or work policies, as they sometimes differ
Ensure you disclose any mental or medical history accurately
Consider filing formal complaints if unfairly denied

While a painful topic, looking through life insurance and suicide scenario lenses when selecting and managing policies allows proper preparations to be made. The more informed the policyholder, the better-equipped beneficiaries will be if ever confronted with this heartbreaking situation.

Get Expert Guidance on Life Insurance for Suicide Protection

Still, have lingering questions about your particular life insurance policy and suicide coverage? The intricacies and variations between plans underscore the importance of speaking with a qualified life insurance or financial planning expert.

Getting personalized guidance ensures you get the appropriate coverage and understand all the subtleties of suicide clauses before problems occur. This grants peace of mind that your loved ones will be financially looked after, whatever life throws their way.

To explore your specific options, contact a veteran life insurance agent today. Knowing the right questions to ask goes a long way when evaluating coverage limitations in such a complex area.