Touchy Subject - Suicide

This is indeed a very touchy subject and most agents will even try to avoid the subject if one of their customers brings up the subject. The fact is that very few people will know how to deal with the life insurance in the case where the policy holder commits suicide. Very few if any people will really get a life insurance quote if they think that they can get away with suicide.

Here we will discuss this very touchy matter and hope that it will enlighten you to your rights as a beneficiary of a policy holder that meets his/her end by committing suicide. You will hopefully learn that insurance policies actually have provisions for suicide and even unsuccessful suicide attempts in their fine print.

If you are put in the situation where you have to deal with the death of your policy holder and you want to file for a claim you must look at the fine detail of the policy and its suicide provision clause. Most insurers will have a suicide provision clause that requires the policy holder to have held the policy for a minimum of 2 years before a claim is illegible. The suicide provision clauses are similar but some insurers may actually have them set up rather differently so it definitely pays to read them properly.

It is also vital to understand that life insurance is regulated by state law and not federal law; this means that depending on which state the insurance policy was first bought will also determine how the insurer will treat the claim in an event of a suicide. The main problem with suicides is that most states except CA and NY view suicide very dimly and will never actively support pay-out to claims from a suicide. This is because they don’t want to indirectly promote the use of suicide for monetary gains.

Some states even allow for the insurer to effectively reject claims for life insurance payment for those who commit suicide. Instead of keeping the money the state laws require that all previous payments be returned with time value of money adjustments.

The main problem when it comes to suicides is that the actuaries table that all insurance companies use to calculate rates and risk do not take into account the risk of suicide when they come to calculating premiums. It is almost impossible to factor in suicide as a probable risk as that drives premiums so high that many people will not be able to afford life insurance. Because of this “sunk cost” many insurance companies are very unwilling to payout claims for suicide and might even completely decline the claim until you get lawyers involved.

Some more liberal states have laws that help with getting insurance companies to pay claims for life insurance even if the policyholder commits suicide. These states will have limited provisions such as a mandatory exclusion period (e.g. 2 years) to protect the insurers but otherwise will have laws that will require claims paid out in full despite the suicide.