Suicide is one of the leading causes of death in the United States. The CDC estimates that nearly 12.2 million American adults seriously contemplate suicide each year, while over 45,000 follow through with the act.
If someone close to you ended their life through suicide, particularly if it was someone you relied on for financial support, you may be wondering, “Does life insurance cover suicide?”
How are life insurance suicide claims generally handled?
Usually, life insurance companies will pay out a suicide benefit if the “exclusion period” has elapsed. The exclusion period is a predetermined duration (typically two to three years), during which the beneficiaries will not receive benefits if the insured commits suicide.
Insurance companies rely on the exclusion period to prevent fraud. For example, someone under desperate circumstances may attempt to obtain a policy, then commit suicide to leave their loved ones a large death benefit. For insurance companies’ protection, the exclusion period prevents such attempts.
Does life insurance cover suicide?
Most traditional life insurance contracts cover suicidal death once the exclusion period has passed. This typically includes both term life and permanent life insurance policies. After the policyholder has passed, the insurance company will request a copy of the death certificate to validate the claim. As long as no suspicious causes of death are listed (such as murder), then the payout to the beneficiaries will proceed as normal.
Suppose a group life insurance policy covers the suicide victim through an employer or another organization (such as those for veterans). In that case, it may still payout benefits even if it’s within the first two years. Generally, these types of policies don’t have the same exemption periods that private life insurance policies carry.
Life Insurance Suicide Payout Clauses
There are two specific clauses for the exclusion period: the life insurance suicide clause and the contestability clause.
Life Insurance Suicide Clause
The life insurance suicide clause stipulates that if the cause of death is determined to be a suicide attempt, then benefits will not be paid out. This includes not only self-inflicted suicide but also an attempt to be killed (such as committing a crime or provoking law enforcement).
Contestability Clause
Insurance companies use contestability clauses to safeguard themselves for the first two to three years after the policyholder’s death. These companies don’t want to pay benefits so soon after initiating a policy. So, they may investigate or contest the cause of death to ensure the policyholder did not make intentional errors in the application.
When is a suicide not covered by life insurance?
Unfortunately, a life insurance company can enforce its suicide clause and deny paying out a death benefit if the insured dies by suicide during the exclusion period.
In general, as long as the exemption period has passed, life insurance companies cover suicide.
Suicide is never an easy topic for anyone, especially those left behind. If you or someone you know is struggling with feelings that can lead to suicide, such as anxiety, depression, or hopelessness, please call 988 for the Suicide & Crisis Lifeline.
