Life Insurance and the Suicide Clause

Life insurance can cover suicide in some cases, to an extent, and sometimes not at all. The truth is that there is a broad range of possibilities for what the life insurance company will do after such a death. That’s why most term and whole life insurance policies will use a suicide clause.

The suicide clause can sometimes state that if a policyholder commits suicide the company will not pay insurance death benefits. Often, there are a set number of years when insurance can refuse to pay (such as one to three years after starting the policy). Within that period, the insured would not be able to pass on benefits.

With this kind of suicide clause, a suicide would pay some or all benefits after death when more than three years have passed. But, this isn’t always the case, so let’s dive into the details of how these clauses work and ways to understand suicide and life insurance.

How the Suicide Clause Works

From the start, insurance companies are concerned about offering coverage for suicide because they fear some could resort to it to provide for loved ones. Instead of offering full coverage for it, they usually use a clause or provision that pays only after a certain period.

If the death benefit is to be paid out, then it is given only after two, three, or five years—whichever the insurer and insured agree to. After the period when the insurance company can contest the death and withhold benefits, the insurance company becomes obligated to give death benefits to the policy’s beneficiaries.

In addition to these clauses, there are exclusion periods set by individual states themselves. In these cases where a state has an exclusion, the period is also time-limited to one or three years. A suicide during an exclusion period means that beneficiaries will not receive benefits. However, in many situations, the beneficiaries can get a return of monthly premiums paid.

When Contestability Periods Apply

Alongside the suicide clause, there can be a contestability period on your life insurance policy. You won’t have to worry about suicide when applying for benefits under the contestability period necessarily, but many people worry that the claim can fail to meet the conditions of the policy because of it.

In truth, unless the insured dies during the first two years of the policy, contestability won’t apply. Instead, the incontestability clause will come into effect. At that time, the insurer cannot contest the payout of death benefits and must pay the benefits. (Still, if the age or sex of the insured is incorrect, this could stop payments.)

What Happens without Suicide Clauses

Suicides can be confusing for life insurance policies depending on their type, but also when they don’t have a clause for it. This leaves applicants wondering if they will succeed with their insurance claim or if they will be denied benefits based on the nature and timing of the death.

For instance, group life insurance offered by employers hardly ever includes a suicide provision and simply pays benefits without question. On the other hand, whole life insurance may only pass on cash value to beneficiaries. They may also pay the death benefit if it’s outside of the exclusion period of a few years.

How Death Benefit Claims Happen

After any death, beneficiaries to the insured will submit a claim to their insurer at which point the company will request the death certificate. When they see the death certificate, they will observe how the person passed, including whether it was a suicide or accident.

In some cases, the nature of the death is uncertain. Under those conditions, the insurance company can ask for additional information about the deceased. Some of the documentation they can review include autopsy reports and other evidence. While this will certainly slow the process of making a claim, it may not ultimately result in the refusal of benefits unless the death is found to be a suicide that fails the suicide clause.

Choosing Your Policy with Sproutt

If the insured has made their payments on time, fulfilled their obligation to the insurance company, and completed suicide, it doesn’t always mean you’ll be denied benefits. Instead, it depends on the details of the contractual agreement and the policy chosen. That’s why it’s crucial to review your policy closely and collect quotes from various insurers.

Sproutt uses advanced technology and deep insight into the life insurance industry to generate quotes for insurance-seekers. You can find out what you might pay for a policy using Sproutt, and it will make it a lot easier to navigate the market, get expert insight, and find the best benefits. Learn more on Sproutt.com.