Does life insurance cover death by suicide? It depends

Does life insurance cover death by suicide? It depends

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The Center for Disease Control reports that suicide rates have increased by 35% since 1999 and that suicide is the No. 10 cause of death in America.

Some people might think that life insurance policies don’t cover death is by suicide. However, most life insurance policies have what’s called a suicide clause: If the policyholder dies by suicide within the first two years of the policy, then the insurance will not give beneficiaries the death benefit. If the death occurs after the two-year period, beneficiaries receive the death benefit.

Unfortunately, that doesn’t mean the process is uncomplicated. If the policyholder failed to disclose mental illness on their insurance application, the death benefit might be withheld.

What is life insurance?

Life insurance is a contract between you and the life insurance company, where you pay premiums (monthly or annually) for a payout that your living relatives will receive upon your death, known as the death benefit. Should you die, the insurance company pays the death benefit to your chosen beneficiary.

There are two types of life insurance: whole (permanent) life and term life. Either can require a medical exam as part of the approval process known as underwriting.

People with certain pre-existing health conditions may be ineligible for traditional life insurance. Therefore, they get no medical exam life insurance. Although there is no medical exam, there is usually a health questionnaire. Failure to disclose certain conditions could result in your beneficiaries not receiving the death benefit. 

Mental illness addressed in the suicide clause

Insurance providers will ask if you ever had mental illness or triggered mental health benefits, Mark Williams, CEO of Brokers International, told Business Insider.

Williams noted that providers may ask whether you’ve used antidepressants, been in therapy, been hospitalized, and whether that was voluntary or involuntary hospitalization. The answers to these questions will determine how the suicide clause is structured — it could be designated for a longer term — or whether your premium increases.

Not all pre-existing conditions will make you ineligible for life insurance. However, failing to disclose certain conditions during the underwriting process can invalidate your coverage later on, and allow the insurance company to refuse to pay the death benefit.

Failure to disclose can delay or void death benefits to beneficiaries

In addition to a suicide clause, most insurance companies have a “contestability” period. The contestability period varies by carrier, but is usually one to two years from the start of coverage. According to AARP, if you die within the first two years of coverage, the insurance company can request your medical history regarding your death. If it is discovered that the policyholder lied on the application or failed to disclose important facts, the insurance company can invalidate the policy.

If you have had mental illness and are considering life insurance, ask your insurance agent about the suicide clause provision. If you already have insurance and are concerned, review your policy and get in touch with your provider.

If you or someone you know is struggling with depression or has had thoughts of harming themselves or taking their own life, get help. The National Suicide Prevention Lifeline (1-800-273-8255) provides 24/7, free, confidential support for people in distress, as well as best practices for professionals and resources to aid in prevention and crisis situations.

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