Will Life Insurance Pay in the Case of Suicide?

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It’s a myth perpetuated by years of television dramas—that life insurance policies are immediately invalidated if the policyholder dies by suicide. Although there are safeguards in place to prevent someone from abusing their life insurance, there isn’t a black-and-white rule that automatically makes surviving family members ineligible to receive life insurance payouts after their loved one takes his or her own life.   

Suicide is the 10th leading cause of death in the U.S., claiming the lives of nearly 45,000 Americans every year. For each suicide, there are an estimated six survivors (family members or friends mentally impacted by the death). That puts the relatively conservative estimate of the number of people who lose a loved one to suicide at 270,000 each year.  And life insurance payouts can provide vital financial security for those left behind. (Related: How to File a Life Insurance Claim.)

When insurance won’t pay a claim after suicide

There are situations when life insurance may not pay a claim, such as when the insured passes away within two years of purchasing a policy, violating the harshly named “suicide clause.” The two-year period begins from any new policy’s start date, even if the policyholder was previously covered by different insurance at the same company. In this event, the insurance company may refund the total premium paid, but won’t pay out the benefit. 

Essentially, this stipulation is to protect life insurance companies from fraudulent or inaccurate claims. Insurance companies also don’t want to perpetuate George Bailey from It’s a Wonderful Life syndrome, when someone believes that they are worth more to their family dead than alive.

Also, a period of contestability is typically enforced during the first two years of a policy (one year in some states) but can be used whenever the insurance company feels it must investigate a death (such as if a declared non-smoker dies from emphysema-related issues). As this investigation takes place, the family must proceed without any death benefit. And depending on what the investigation finds, benefits can be withheld completely. (Related: How to Find a Lost Insurance Policy)

When insurance will pay a claim after suicide

A policy that covers natural death (including health-related death and accidents) will typically pay benefits in the event of suicide once this two-year period expires, assuming the following:

  • First, premium payments must be up-to-date to prevent policy lapse. If the insurance company claims otherwise, beneficiaries can ask for proof that premium-due notices were mailed to the correct address to notify the insured of an impending lapse or termination.
  • Secondly, the insurance company should not have any cause to suspect material misrepresentations. If, for example, your loved one failed to disclose a documented history of mental illness or substance abuse, death benefits can be revoked, whether the cause of death is suicide or not.

How to appeal a denial of a claim

If a claim is challenged or denied in the event of suspected suicide, a family may opt to appeal the decision. An insurance company shoulders the burden of proof when it comes to suicide, and in some cases, intentions may be hard to prove objectively. Even if the official cause of death is listed as suicide, an independent pathologist hired by the deceased’s loved ones may determine otherwise. Beneficiaries can start the appeal process by contacting the Insurance Commission and pursuing legal action if that proves unconstructive.    

Case in point: The family of Heath Ledger’s daughter sued the actor’s insurance company, ReliaStar Life, after the firm launched an investigation into his death. In January 2008—just seven months after taking out a $10 million policy—Ledger overdosed on prescription medication, which the medical examiner’s office ruled as an accident. The case was reportedly settled for less than the full death benefit.

If you or someone you know needs help, call the National Suicide Prevention Lifeline at 1-800-273-8255, or 1-800-799-4889 for deaf and hard of hearing. Or find their live chat service here.

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