Does Life Insurance Cover Suicide?

One common question we receive is: does life insurance cover suicide? 

The answer is not a simple one. 

There are a variety of factors that go into determining whether or not suicide is covered by a life insurance policy. This can also vary depending on the insurance company. 

In this post, we'll take a closer look at what happens when someone commits suicide and whether or not life insurance benefits are payed out in such cases.

How does suicide affect life insurance policies and claims?

When a life insurance policyholder passes away by suicide, the life insurance company will investigate the circumstances surrounding the death to determine if it was indeed a suicide. If the insurer finds that the policyholder committed suicide, there are two scenarios that might happen.

Most policies have a suicide clause. It states that if the policyholder dies of suicide within a certain time frame after the policy is purchased (usually two years), then the insurer will be obligated to return the premiums paid for the policy to the beneficiary.

On the other hand, if the suicide happens after 2 years of the policy being active in Canada, the insurance policy will pay out the full death benefit to the beneficiaries.

Be aware that your policy may only pay out the premiums that were paid for the policy if you pass away by suicide within the first two years after the insurance policy is purchased.

What is a suicide clause?

Most policies have a suicide clause, which is a provision in the policy that states that if the policyholder dies of suicide within a certain time frame after the policy is purchased (usually two years), then the insurer will only return the premiums that were paid for the insurance policy to the beneficiary.

This clause is in place to discourage people from purchasing policies and then commit suicide in order to collect the death benefit.

Does group life insurance cover suicide?

Group life insurance is a type of life insurance that is typically offered through employers. It is important to know that group life insurance policies often have different rules and regulations regarding suicide than individual life insurance policies.

For example, some group life insurance policies will pay out a death benefit to the beneficiary if the policyholder dies by suicide, while other group policies will only return the premiums that were paid for the life insurance.

It is important to check with your employer to see what their group policy covers in the event of suicide.

How do life insurance companies determine if a policyholder died by suicide?

When a life insurance policyholder passes away, the life insurance company will investigate the circumstances surrounding the death to determine if it was indeed a suicide. The insurer will look at factors such as the police report, autopsy report, and medical records to make a decision. 

Most policies have a suicide clause that states that if the policyholder dies of suicide within a certain time frame after the policy is purchased (usually two years), then the insurer will only return the premiums that were paid for the policy to the beneficiary.

How does depression affect life insurance?

Depression does not automatically exclude someone from life insurance coverage, but it may affect your monthly premium. Life insurance companies consider depression a mental health illness, and like any other ailment, it may be grounds for exclusions or higher premiums.

If an applicant discloses their depression or other mental health issues during the life insurance application process, the company may require a letter from a physician verifying that the applicant is currently receiving treatment and their condition is stable. The insurer will also likely pull the applicant's medical records to get a complete picture of their mental health history.

Applicants who are actively being treated for depression and have a stable mental health condition are typically able to get life insurance coverage, but they may be charged a higher premium than someone who does not have depression. 

Depression along with other mental health issues that are not being treated, may result in an exclusion from life insurance coverage. If an applicant has a history of suicide attempts, insurance companies will typically exclude coverage for suicide.

Are there any other factors that could affect life insurance payouts in cases of suicide?

Yes, there are a few other factors that could affect life insurance payouts in cases of suicide. For example, if the life insurance policy has a suicide clause, then the insurer will not pay out a death benefit to the beneficiary if the policyholder dies by suicide within the specified time frame.

Furthermore, if the life insurance policy is a term life insurance policy, then the insurer will not pay out a death benefit to the beneficiary if the policyholder dies by suicide within the specified time frame. However, after the period is over, insurers will pay out death benefits to beneficiaries even if the policyholder died by suicide.

So, there are a few factors that could affect life insurance payouts in cases of suicide, with the policy being a term life policy highlighting just one example. However, it is important to note that most policies will still pay out the premiums that were paid for the policy to the beneficiary if the policyholder dies of suicide within the first two years after the life insurance policy is purchased. 

What to do if your life insurance claim is denied?

If your life insurance claim is denied, the first thing you should do is contact the insurer to find out why (your life insurance broker can assist with this). It is possible that there was a mistake made or that the insurance company needs more information from you. 

If you are still not able to reach a resolution with the insurer, you may need to hire an attorney who specializes in life insurance claims to help you.

Conclusion

Now that you understand how life insurance covers suicide, it’s important to know what your options are as a beneficiary. If the policyholder took out a policy with suicide clauses, there may be restrictions on who can receive the payout and how much they will receive. 

In some cases, the beneficiary might not receive anything at all. However, most individual life insurance policies do not have suicide clauses and payouts will go to the beneficiary as designated by the policyholder.

FAQ

When do insurance companies not pay out?

The life insurance company will not pay out a death benefit to the beneficiary if the policyholder passes away by suicide within the specified time frame (usually two years). 

What is the difference between suicide clause and incontestability clause?

The suicide clause is a life insurance policy provision that states the insurer will not pay out a death benefit to the beneficiary if the policyholder dies by suicide within the specified time frame (usually two years). 

The incontestability clause is a life insurance policy provision that states the insurer will not contest the policy after it has been in force for a certain period of time (usually two years).

How does physician-assisted suicide affect life insurance payouts? 

Physician-assisted, also known as a doctor assisted suicide, is when a doctor helps a patient end their life. If the policyholder dies by physician-assisted suicide, life insurers will generally not pay out a death benefit to the beneficiary.