We won’t sugar coat this. There is a suicide epidemic in America. On average, 115 people in this country die by suicide each day. And I want to be clear, both men and women endure this horrible tragedy.
Believe it or not, suicide is the 2nd leading cause resulting in the death of people under the age of 24. There is absolutely something wrong with a country where young people die because they can’t stand their lives.
How Does Individual Life Insurance Cover Suicide?
If you have individual coverage on your life insurance, it may contain a clause that denies payment if the insured commits suicide within a specific period after the policy commences. The period is mostly the first two years of the policy, or it can be one year in some states. If the insured dies from suicide after this period, the life insurance company will pay the same death benefits as for other illnesses or causes.
However, the company will not pay any death benefit if the suicide occurs during the barred period. At most, it will return your premiums minus outstanding premiums. For whole life or other permanent policies, the company may also reduce the amount of any outstanding loans against the cash value.
How Does Group Insurance Policies Handle Suicide?
Group insurance policies are generally offered at work where your employer will pay for it. Mostly, they may not have any suicide clause. So, if a person gets free life insurance at work, the coverage pays the benefit if you file the claim correctly.
However, if your group life insurance covers suicide or has the contestability clause like individual policies, things may change. If the suicide occurs during the initial one or two years of the policy, the beneficiaries may get only the employee’s premiums for the coverage.
How Does Military Life Insurance Deal with Suicide?
Veterans and active military members qualifying for life insurance through the Veterans Affairs get coverage for suicide cases. Military policies like SGLI and VGLI provide this coverage as they have no suicide clause or contestability period.
What is the Life Insurance Suicide Clause?
After a policy has been in place and paid for over 24 months, suicide is covered in almost every state and every insurance contract as a payable event. So, as gently said as possible, if someone were to take out a policy and hold it for 24 months and then commit suicide, yes, the policy would pay your beneficiaries in full.
How Does Life Insurance Deal with Depression?
A life insurance company assesses your health and medical history to check your risk factors. It means the underwriters review the likeliness of your death during the policy term. It includes your physical and mental health.
Since depression is commonly linked to suicidal deaths, it is mandatory to disclose this condition during the application. You may have to answer basic questions like when you were diagnosed with depression and what is the severity of your condition.
The insurer may also ask for evidence of treatment to offer competitive rates on their policies. Hence, you must check these conditions when asking how does life insurance cover suicide.
How Does Life Insurance Deal With Doctor-Assisted Suicide?
Physician-assisted suicide or death-with-dignity situations apply to people suffering from terminal illnesses if they choose death over suffering through diminished life quality or pain during treatments.
These cases are considered the same as suicide. It means they are covered but not for the first two years of your policy. Currently, the states of Washington, Colorado, Vermont, Oregon, and California have laws to protect doctor-assisted suicide cases.
When Can Insurance Companies Deny the Payouts?
Insurance companies can deny payouts during the contestability period of a policy. It is generally the first two years or the first year after the policy becomes effective. The insurer can contest any death benefit claim during this time by investigating the death and determining if the beneficiary makes the legitimate claim. Like the life insurance suicide clause, it helps discourage the people from misrepresenting the facts on their application.
When underwriting, the company may ask several health-related questions to set your premiums based on the risk factors. People with a medical history of severe health problems will be charged higher premiums than healthy individuals. The carriers may even ask for a medical exam to collect more information about your health.
But, if an applicant lies about something like their smoking habits and dies within a year due to lung cancer, the insurance company can investigate the issue and deny the claim due to misrepresentation by the applicant. However, they have to fulfill some conditions like:
- The insurer can’t simply deny the payouts without the cause and evidence of misrepresentation or fraud during the contestability period.
- The contestability period applies for the first two years, but it can be reinstated if the policy lapses and the policy owner decide to reinforce it.
- The contestability period is not the same as the suicide clause though the period overlaps for both. Suicide is related to self-harm, while contestability helps determine the fraud.
What is the Incontestability Clause?
The incontestability clause is just the opposite of the contestability period. It says that after the first two years, the carrier cannot deny payouts by claiming misstatements or frauds in the application. Some exceptions to the incontestability clause are errors like gender or age that require recalculation of coverage. Overall, this clause protects the insured people from their policy’s cancelation due to minor errors in their application.
How Does Life Insurance Deal with Drug Overdose or Alcoholism?
Many life insurance policies will cover alcohol-related or drug overdose deaths. But, the payouts will depend on individual circumstances and exclusions, if any, in the policy. The accidental overdose will be covered if the medications and the reason for their intake were disclosed in the application form. The insurer may contest this claim during the contestability period to prove that the death was suicidal, not accidental.
Similarly, death due to illegal drug abuse and overdose is denied during the contestability period. This clause covers illegal acts along with suicides. However, after the period of the life insurance suicide clause and contestability ends, your claim will be paid depending on whether you had disclosed all information in the application.
For example, if you attended a drug rehab program, you must reveal this information when applying. The same rules apply to alcohol-related deaths. If you do not disclose your history of alcohol abuse, drinking behavior, or mental health, leading to alcoholism, your family will be denied your death benefits.
Can You Prevent a Denied Claim After a Suicide?
If you want to ensure that the insurer will not deny your claim, do not hide any relevant information when buying the policy. You may be worried about the rejection of your application due to a health condition or lifestyle behavior. Remember, any false information will lead to the rejection of death benefits for your family.
If you ever had suicidal tendencies, attempted suicide, or have a medical history of mental illness, don’t forget to ask if life insurance covers suicide before buying a policy.
You should work with independent agents that deal with multiple insurance companies to help you find the best coverage available. When applying, disclose all information related to:
- Medications prescribed to you, previously or currently
- History of alcohol or drug use, abuse, and treatment
- Risky habits or hobbies like skydiving or smoking
- Previous diagnosis or treatment for a mental condition like depression
The limitations on your death benefits may change according to the information you provide. Also, the insurer may offer higher rates or add some conditions or exclusions to your policy. Not disclosing relevant information will end up in zero death benefits for your loved ones, even if you paid premiums all through your life.
Apart from revealing the essential details on your application, keep your beneficiaries updated with terms and a copy of your policy to make a claim when the time comes.
Gary P. Cubeta
(Serving Americans In All 50 States)