You probably don’t want to think about the possibility of suicide. No one wants to consider the fact that there may come a day when they feel as though they have no other option but to take their own life. As horrible as that thought is, it’s a very real situation for some people.
Does Life Insurance Cover Suicide?
Suicide is a complicated topic. It’s the people left behind that suffer emotionally and financially.
It gets even worse when you link it to life insurance. Wondering if the insurance company would honor your claims if you lost a loved one to suicide? Our ability to handle the challenges that life throws at us are different for each individual.
The answer ultimately lies in the terms and details of a specific life insurance policy.
Factors that may contribute to suicide include:
- Drug abuse & alcoholism
- Realization of a terminal illness
- Families with depression or anxiety, just to mention but a few.
Suicide is a permanent solution to a temporary problem. If you or someone you know is contemplating suicide please reach out to a mental health professional or call 911.
Example if the insured commits suicide
Here’s an example of the least amount someone would receive if the insured commits suicide.
In our example, Jane had initially lied during the application process because she didn’t indicate having a drug and alcohol problem. She also didn’t reveal that he checked into rehab for a period of 6 months.
When her husband filed for death benefit claims from the insurance company, the insurer contested (to be explained further). The investigators found out that Jane had previously been admitted into a rehab facility back in college for alcohol addiction.
The company denied claims based on her alcohol addiction. Jane committed insurance fraud which makes the beneficiary ineligible for the full death benefit.
Here’s what will happen
The company will calculate the total premiums Jane paid the last 8 months her policy was active.
- Jane paid $833.33 per month for her policy.
- She paid her premium for 8 months before committing suicide.
- $833.33 multiplied by 8 months = $6,666.67
- The beneficiary will receive $6,666.67; these are the total premium Jane paid
- This is the amount that the life insurance company is obligated to honor.
In life insurance policies, providing accurate information in your application guarantees a death benefit payout to your beneficiaries.
Why is this important?
Suppose Jane Doe gave the right information instead of withholding or lying; her premiums would have been higher.
The end result? Jane’s monthly premiums would have been more expensive…but the company would have paid the beneficiary the full death benefit amount. Unfortunately, some people think getting approved is what’s most important. The most important reason to get life insurance – is to pay out when you die.
Let’s say medical history of an alcohol addiction and checking into rehab made her two times riskier. This adds a 100% to the standard risk insurance class. The underwriters would use that information in their database.
In our case study; $833.33 x 2 = $1,666.66 monthly premium.
She would have doubled her original monthly premium of $833 (which was based on false information). However, her beneficiary (her husband) would now receive the full death benefit amount because the $1,6666 premium is based on accurate information.
Some areas related to suicide that require you to be honest when applying for life insurance are:
- Family history mental health factors and its variations.
- History of alcohol and drug use/abuse, admission into a rehab facility.
- Any type of medications you undertook in the past and even at the time of application.
Disclosing the correct details of all that information is essential. It allows you to pay your premiums knowing that your beneficiary will be paid, even in the worst-case scenario, like suicide.
life insurance suicide clauses
Life insurance starts to cover suicide two years after effecting the policy. Two years into the agreement is when both contestability period and suicide clause expire. When that happens the life coverage starts to work for suicide like any other death.
The suicide clause is meant to discourage applicants from getting an insurance against their own suicidal death. It starts from when the policy is in force and extends through the first two years. If the insured commits suicide within this period, no death benefit is paid to the beneficiary. Instead, they’ll be allowed total premiums.
So that serves as a warning. That most life insurance policies do not cover people who intend to take their own lives in order to leave money for their loved ones.
The contestability clause is broader than the suicide clause because it extends to other factors. Such as, engaging in illegal acts and abusing hard narcotics.
To contest means the insurance company has refused to pay claims to the beneficiary. Usually based on the death of the insured not aligning to the terms of the agreement in the policy.
Contestability period takes effect the first two years of an insurance policy. If the circumstances surrounding the death of the insured during this period are suspicious, the insurance company may investigate.
This it does by examining the following factors:
- Reading through autopsy reports made by qualified physicians.
- Interviewing the neighbors, relatives, or any other eye witnesses.
- Searching for any evidence on drug and alcohol abuse.
- Checking the medical history of the insured and records of treatments.
- Going through the death certificate.
- Investigating if the death of the individual resulted from any illegal activities.
And if the results show evidence of an illegal activity, say abusing an illegal drug. The insurance company may deny to pay claims to the beneficiary.
Once the contestability period expires after two years, the insurance company is stripped the power to contest. If the holder commits suicide from since then, the insurer will have no other option but to pay out the death benefit.
Is drug abuse & alcoholism covered by life insurance?
It wouldn’t be a good idea to apply for life insurance while poisoning your body with dangerous drugs. The best life insurance companies understand this. That’s why they consider people that are addicted to drugs and alcohol as higher risk persons.
They are at a higher risk of accidents, random injuries, and cases of domestic violence.
Drugs and alcohol abuse can make addicts dysfunctional. When life becomes difficult, some resort to suicide due to low self-esteem and hopelessness.
That’s why life insurance companies sometimes don’t want to offer coverage. Insuring ‘accidents’ waiting to happen isn’t in their business model.
Coverage for recovering addicts
Life insurance covers a recovering addict who has shown a history of sobriety. Recovering addicts need to be clean and sober for at least two years. Records and details of treatment matter in the evaluation of the premiums for the agreement policy.
A life insurance company does not pay out death benefit for a drug overdose that was intentional.
Why? Insurance providers classify drug use as a risky behavior. But this greatly depends on whether the insured gave the correct information about their drug use history when applying for insurance.
The insurers investigate if the death of the insured was connected to drug overdose or alcohol abuse.
They basically check the following items in relation to drug-related deaths:
- Classification of the drug the policyholder overdosed on.
- If the drug overdose was intentional or by accident.
- How often the subject abused the drug and the level of damage it did to them.
- If the insured ever broke any laws as a result of their drug use problem.
- The number of drugs the policy holder was hooked on.
- Indicators of dependence and withdrawal. If they reached out for help from rehabilitation facilities.
The underwriters obtain the information above when the insured dies in a mystery surrounding drug abuse. If they find out any details that do not match their records they have the right to contest the insurance claims. And that means they may not pay the death benefit.
But if the policy holder gave accurate and consistent information of their drug use history, and genuinely relapsed to a drug overdose level, then the company will pay.
Relapse is a very common trait among people who are dependent on drugs and alcohol. And those who relapse must not be punished for their mental illness but rather be helped.
Since the policyholder probably signed up for the policy when they were sober and healthy. But they recently started using again to the point of an overdose, the insurance provider may compensate the beneficiaries for the loss of their loved one.
Does Group Life Insurance Cover Suicide?
You are lucky if an employer or the organization you work for bought group life insurance policies for you and your colleagues. However, group life insurance may cover suicide differently than individual life policies.
The group life policy type that covers suicide without limits, even for the first two years, is the one that’s fully paid for by the employer.
But if you added coverage on top of what your employer pays for your group cover, then suicidal death is regarded in the terms of suicide and contestability clauses already discussed.
Does Life Insurance Cover Physician-Assisted Suicide?
Most people are frightened at the thought of falling victims of some terminal illness, with a prognosis of six months or so to live. In such situations some people may decide to respectfully ask the doctor to assist make their death faster, so they don’t suffer through.
Most life insurance companies are aware of such needs.
They cover doctor-assisted suicides once the contestability period and suicide clauses have expired.
But here’s the kicker.
It is important to double-check with your agent. The life insurance policy you purchased may contain additional exclusions that would render your beneficiary’s claim null and void.
It’s easier to overlook a clause that classifies physician-assisted suicides as an illegal activity. But you sign up and your beneficiaries won’t receive a dime when they file a claim on such basis. Dying is a matter of ‘when’ and not ‘if’, and there are more than a 1000 ways to die.
Whether a life insurance policy covers suicide comes down to the terms of the policy between the company and the insured. Although contestability and suicide clauses apply in most life insurance policies, you must evaluate to check for any additional exclusions in your contract.
Because it’s important to get your family a coverage that won’t frustrate them. Even if the worst of complicated life events happens to you.
If you’re not sure where to begin, give us a call. Our agents provide a free, no-pressure, educational approach to life insurance. We’ll compare dozens of the top companies in minutes to show you your most affordable options.