Does Life Insurance Cover Suicide? Find Out Now

One of the heart throbbing topics is ‘Suicide’. It is to end one’s own life at their own wish. Though it is not a pleasant topic to discuss, it is still important to talk about it when it comes to life insurance policy.

Many people are in a myth that life insurance companies do not pay for suicidal deaths. But in reality, that is partly true and partly false. Let’s discuss about it in detail.

Many people enroll for bigger insurance policies and then commit suicide to help their families come out of financial crisis. You may feel that this absolutely absurd, but it does happen in the real world.

Usually when a person is dumped into heavy debts or experiences a huge loss in business such that the financial maintenance is beyond the capability, the person might tend to prefer suicide in order to help the family to withstand financial crisis.

Insurance companies will have a nightmare with these kind of cases, as these type of people intentionally enroll for bigger plans that can be claimed in huge dollars.

In order to discourage these kind of plans, insurance companies construct plans with certain exclusions that null and void certain benefits if you expire in a different manner, like suicide.

If the policy holder commits suicide during the contestability period, which is generally 2 to 3 years, the insurance company pays only the premium amount, without any extra benefits.

However, if the policy holder overcomes the contestability period, then the insurance company cannot deny the payments.

The Suicide Clause

The key rules

Content Source - Time.com

People prefer life insurance policies to help their loved ones financially, after their demise. However, the way a person expires matters a lot when you claim for the benefits. Many people doubt does life insurance cover suicide or not.

According to the guidelines of suicide exclusion, the insurance company have the full right to deny the pay of benefit amount of the policy if the demise of the policy holder is due to a suicide and is within the first 2 years of coverage.

If the insurer expires to match this exclusion, then the company pays only the premium amount without any benefits. This clause can protects the insurance companies from people who intentionally buy a policy to avail the benefits by committing suicide.

Irrespective of any kind of situation, the family that is left behind should surely consult insurance company to claim for the benefits. Especially, if a child is involved in the plan as a beneficiary, it is suggested to immediately consult the insurance company. One should remember that this situation surely creates a great battle for the family left behind, with the insurance company, in order to avail the benefits.

According to ACLI (American Council of Life Insurers), almost 99% of life insurance claims are fully paid, irrespective of how you die, provided the policy holder pays the premium appropriately to receive the benefits. In places like Oregon and Washington, the contestability period is not a matter for the insurance companies to deny the benefits, if it’s an assisted suicide.

When Do Insurers Deny The Payments?

In certain scenarios, insurance companies deny the claim on the grounds of suicide, though it is not a suicide and even if you have fully paid up for the policy.

According to customer reviews, insurance companies try their best to study into the case of the demise of a policy holder to surely confirm that it is not a suicide.

Stella Pierce, a Montana widow, shared her personal experience of troubles that she encountered with an insurance company during the demise of her husband, which was not a suicide.

Her husband has been fighting cancer for several years, when suddenly one day, he lost his life in a fatal accident. He was just 46 at that time and the contestability period has not reached. When Stella consulted the insurance company, the company denied the claim on the grounds of suicide.

The medical reports showed that the policy holder took lethal amount of pain killers. Though the doctors explained that the reason for high levels of the drug on his toxicology report was because of the treatment of cancer, the company denied the payments. Stella sued the company to get $250k in policy money. The company still denied the claim and only paid the premium amount and claimed that they had no wrong on their side.

Why do Companies deny?

Insurance companies make business for profits, like any other business. They hire a special team to search for points that could deny the benefits. When a policy is made, it will surely have loopholes like demise due to:

Suicide
Alcohol
Drugs due to illness
Dangerous activity like sky diving

When a policy holder expires, the company tries its best to ensure that the death has occurred naturally in order to make the payments.

Insurance companies include loopholes like fine prints and exclusions in order to save themselves from paying the claims that are huge. Every claim can be a burden for the company and sometimes, it can be a nightmare. Therefore, you need to carefully read your insurance policy before you sign it. If there is anything that you sense uncertain, you should ask questions right away and for more clear understanding.

Another important reason to understand the exclusions before you sign is that though the premium appears to be low compared to other companies, the policy guidelines can be tricky. So, ensure that you have signed a best policy that can offer you great benefits when claimed.

About insurance companies that support suicide claims

As already mentioned, suicidal claims are denied only when the policy holder expires before the contestability period. However, if the demise is after the waiting period, the benefit amount can be claimed.

One of the insurance companies in Australia, xLife, operates Australia wide to offer various life insurance services.

The company pays a suicide claim if the policy holder expires after a suitable waiting period, which is generally 13 months. The company won multiple prestigious awards since its inception and the reviews are positive.