What Happens to Your Life Insurance If You Commit Suicide?

Life insurance is a contract between an insurance company and a policyholder, where the company agrees to pay a sum of money to the beneficiaries of the policyholder in the event of their death. Life insurance can provide financial protection and peace of mind for the loved ones of the policyholder, especially if they depend on their income or support.

However, life insurance is not a simple or straightforward product, and there are many factors and clauses that can affect the payout of the death benefit. One of these factors is the cause of death of the policyholder, and whether it was intentional or accidental.

In this article, we will explore the question of whether life insurance covers suicide, and what are the limitations and conditions that apply. We will also provide some tips and advice on how to avoid the pitfalls of suicide exclusion clauses and ensure that your life insurance serves its intended purpose.

What is a suicide exclusion clause?

A suicide exclusion clause is a provision in a life insurance policy that prevents the beneficiaries from receiving the death benefit if the policyholder dies by suicide within a certain period of time, usually one or two years, after buying or renewing the policy. The purpose of this clause is to protect the insurance company from fraud or moral hazard, where people might buy life insurance with the intention of ending their lives shortly after.

For example, suppose Alice buys a $500,000 life insurance policy and pays a monthly premium of $50. If she commits suicide within the first year of the policy, the insurance company will not pay the death benefit to her beneficiaries, but will only refund the premiums she paid, which is $600. This way, the insurance company avoids losing money on a policy that was never meant to be a genuine risk.

However, if Alice dies by suicide after the first year of the policy, the insurance company will pay the full death benefit to her beneficiaries, as long as there is no evidence of fraud or misrepresentation on her part. This means that Alice did not lie or conceal any information about her mental health or suicidal tendencies when she applied for the policy.

How does the suicide exclusion clause vary by policy type?

The suicide exclusion clause and the exclusion period may vary depending on the type of life insurance policy, such as group, term, or whole life insurance. Here are some examples of how different policies may handle suicide:

• Group life insurance: This is a type of life insurance that is offered by an employer or an organization to its members or employees, usually as part of a benefits package. Group life insurance policies typically have a shorter or no suicide exclusion period, as they are based on the assumption that the policyholders are healthy and employed, and have no reason to commit suicide. However, some group policies may still have a suicide clause, especially if they are voluntary or supplemental, meaning that the policyholders have to pay extra for them. In that case, the suicide exclusion period may be one or two years, depending on the policy.
• Term life insurance: This is a type of life insurance that provides coverage for a fixed period of time, such as 10, 20, or 30 years. Term life insurance policies usually have a suicide exclusion period of one or two years, depending on the policy. If the policyholder dies by suicide within the exclusion period, the insurance company will not pay the death benefit, but may refund the premiums paid. If the policyholder dies by suicide after the exclusion period, the insurance company will pay the death benefit, as long as there is no fraud or misrepresentation involved. However, if the policyholder renews or converts their term policy to a permanent policy, the suicide exclusion period may start over from the date of renewal or conversion.
• Whole life insurance: This is a type of life insurance that provides coverage for the entire lifetime of the policyholder, as long as they pay the premiums. Whole life insurance policies usually have a suicide exclusion period of two years, regardless of the age or health of the policyholder. If the policyholder dies by suicide within the exclusion period, the insurance company will not pay the death benefit, but may refund the premiums paid or the cash value of the policy, whichever is higher. If the policyholder dies by suicide after the exclusion period, the insurance company will pay the death benefit, as long as there is no fraud or misrepresentation involved.

What are the exceptions or rules for assisted suicide or self-inflicted injuries?

Some life insurance policies may have different rules or exceptions for assisted suicide or self-inflicted injuries, which are not considered the same as suicide. Assisted suicide is when a person voluntarily ends their life with the help of another person or a medical professional, usually due to a terminal illness or a chronic condition. Self-inflicted injuries are when a person harms themselves intentionally or unintentionally, but without the intention of dying.

The legality and morality of assisted suicide and self-inflicted injuries are controversial and vary by state and country. Therefore, life insurance policies may also vary in how they treat these cases. Some policies may consider them as suicide and apply the suicide exclusion clause, while others may consider them as accidental death and pay the death benefit. Some policies may also have specific provisions or riders that cover or exclude these scenarios.

For example, suppose Bob has a $1,000,000 life insurance policy with a two-year suicide exclusion period. He is diagnosed with a terminal cancer and decides to end his life with the help of a physician-assisted suicide program in his state. If his policy considers assisted suicide as suicide, the insurance company will not pay the death benefit to his beneficiaries, as he died within the exclusion period. However, if his policy considers assisted suicide as accidental death, the insurance company will pay the death benefit, as long as he did not lie or conceal his condition when he bought the policy.

Similarly, suppose Carol has a $500,000 life insurance policy with a two-year suicide exclusion period. She suffers from depression and cuts herself regularly, but does not want to die. One day, she accidentally cuts herself too deep and bleeds to death. If her policy considers self-inflicted injuries as suicide, the insurance company will not pay the death benefit to her beneficiaries, as she died within the exclusion period. However, if her policy considers self-inflicted injuries as accidental death, the insurance company will pay the death benefit, as long as she did not lie or conceal her condition when she bought the policy.

How to avoid the pitfalls of suicide exclusion clauses?

To avoid the consequences of suicide exclusion clauses, policyholders should be aware of the following tips:

• Read the policy document carefully and understand the terms and conditions of the suicide clause, such as the duration of the exclusion period, the type of coverage, and the exceptions or refunds that may apply. Some policies may have different exclusion periods for different types of coverage, such as term, whole, or universal life. Some policies may also offer a partial refund of the premiums paid if the policyholder dies by suicide within the exclusion period. Make sure you know what your policy entails and ask questions if anything is unclear.
• Seek professional help or call a suicide prevention hotline if you are struggling with suicidal thoughts or mental health issues. Suicide is not a solution and there is hope for a better future. There are many resources and support groups available to help you cope with your challenges and find a way forward. Do not hesitate to reach out for help and do not let the fear of losing your life insurance deter you from seeking treatment. Your life is more important than any policy.
• Maintain the policy in force and do not make any changes or conversions that might reset the suicide exclusion period. If you have a term life policy that is about to expire or a permanent life policy that allows you to change or convert your coverage, be careful not to trigger a new suicide exclusion period by doing so. For example, if you have a 10-year term policy that has a two-year suicide exclusion period and you renew it for another 10 years, the suicide exclusion period will start over from the date of renewal. Similarly, if you have a whole life policy that lets you convert it to a universal life policy, the suicide exclusion period will start over from the date of conversion. To avoid this, you can either keep your existing policy as it is or shop around for a new policy that has a shorter or no suicide exclusion period.
• Inform the beneficiaries of the policy details and the suicide clause, so they can be prepared and avoid any disputes or delays in the claim process. Make sure your beneficiaries know who they are, how much they are entitled to, and how to file a claim in case of your death. Also, make them aware of the suicide exclusion clause and its implications, so they can understand the risks and act accordingly. For example, if you die by suicide within the exclusion period, they might be able to claim a refund of the premiums paid instead of the death benefit. Alternatively, they might be able to challenge the denial of the claim if they can prove that your death was accidental or caused by factors beyond your control, such as medication side effects or coercion.

Suicide exclusion clauses are common in life insurance policies, but they do not have to be a deal-breaker. By being informed, proactive, and responsible, you can protect yourself and your beneficiaries from the potential pitfalls of these clauses and ensure that your life insurance serves its intended purpose: to provide financial security and peace of mind for your loved ones in case of your death.