According to the American Council of Life Insurers, 99% of all life insurance claims are paid to beneficiaries. This leaves 1% that are not paid – are suicide cases apart of this? This raises the question, does a suicide void one’s life insurance policy?

While the answer to this can be yes, it is not because of the means of death but more because of something called the “contestability clause”.

What is the contestability clause?  

The contestability clause is a period, normally lasting two years, from the date that a life insurance policy begins. If the insured dies within these first two years, the insurance company has the right to investigate the cause of death and see if any misstatements were made on the application for the insurance. This includes looking at the autopsy reports, medical reports, and interviewing  friends and family. For example, say someone dies of lung cancer. The insurance company will look through the insured’s medical report to see if there is a history of smoking. If there is, and the insured did not disclose this, the insurance company has a right to not pay the death benefits.

What is the suicide clause?

The suicide clause, while a specific clause in many policies, basically just falls into the contestability period. If the insured’s death was intentional, and occured within the contestability period, the beneficiaries won’t receive a payout. All premiums already paid and some interest will be returned to the beneficiaries though. Even if there is not a specific suicide clause in your policy, if you have a history of depression, and it was not disclosed when buying the policy, the insurer could eliminate the benefits if suicide is committed, within the first two years, based on misstatements made during the application.  

The suicide clause is trying to prevent people from buying a policy with the intention of committing suicide as soon as their policy takes effect. The suicide clause also tries to curb the incentive of quickly providing financial security to loved ones.

What happens after the two year contestability period?

After the two year contestability period, life insurance policies then become incontestable, which means the insurance company cannot deny benefits, except in cases of outright fraud. Insurance companies will not look into people’s deaths and cannot deny the death benefit because of misstatements made by the insured or in cases of suicide. In the past, many insurance firms would deny a large amount of benefits on small technicalities. Insurance companies actually introduced the incontestability clause to build  trust with consumers .

Consumers do need to keep in mind that when they get a new policy to replace an old one, even if it is with the same company, the clock gets set back to zero and the two year contestability period is put back into effect.

Does life insurance pay for suicide?

From all the info above, the answer becomes yes, as long as the policy has been in force for two years. While there are some horror stories online, there are very few instances where a death is not ruled a suicide but the insurance company claims it is. One famous example of this occurred with actor Heath Ledger, since he died 7 months after buying a policy. In cases like this, many times, the beneficiary of the policy takes the insurance company to court. In Ledgers case, his daughter did get an undisclosed amount of the death benefit after going to court.

If you or someone you know is having suicidal thoughts, call the Suicide Prevention Lifeline at 1 (800) 273-8255 or visit www.suicidepreventionlifeline.org.

 

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