While there are no easy answers when a loved one dies by suicide, one question you may be unsure of is whether their life insurance policy is still valid. In some cases, yes, beneficiaries can still receive a life insurance payout if the policyholder dies by suicide. However, there are exclusions that may invalidate this type of claim. Bankrate breaks down how life insurance policies work in these instances to help you navigate this difficult time.

When does life insurance cover suicide?

Contrary to popular belief, life insurance can cover a policyholder’s suicidal death as long as certain conditions are not infringed. It is helpful to review the policy for the specifics, but death by suicide may still result in the death benefit being paid out to the insured’s beneficiaries.

  • Military life insurance: Some military-focused life insurance policies, like ones offered by Veterans’ Group Life Insurance (VGLI) and Servicemembers’ Group Life Insurance (SGLI), are unique in that they typically pay out the death benefit to the insured’s beneficiaries regardless of the cause of death. Meaning, even if the insured dies from an act of war or by suicide, their life insurance policy may still pay the death benefit.
  • Accidental death: This can be a bit of a gray area. Whether or not accidental death is covered by a life insurance provider generally depends on two things: the circumstances of the death and what the insured discloses with their life insurance provider when they complete their policy application. For instance, if the insured dies from a prescription drug overdose, but disclosed to their insurance provider that they take prescription drugs when they first applied for their policy, the beneficiaries may still receive the death benefit. However, death by illegal drug overdose is typically not covered.

However, most life insurance policies include contestability periods and suicide clauses which must expire before a suicidal death will be covered. Usually for a two- to three-year period after the policy’s effective date, these exclusionary clauses place stipulations around death benefit payouts, including those for suicidal deaths within that time frame. If the insured person passes away after these clauses expire, however, beneficiaries may receive the death benefit left to them by the policyholder.

What is a life insurance suicide clause?

A suicide clause is often in force for two or three years after a life insurance policy takes effect. During this timeframe, the clause stipulates an allowance for investigation of the policyholder’s death.

If the insurer demonstrates that the policyholder died by suicide during this two- or three-year period, or if law enforcement or a medical examiner rules the policyholder’s death a suicide, the insurer may deny a beneficiary’s claim to the life insurance death benefit.

What is a life insurance incontestability clause?

The contestability clause accounts for the circumstances around a policyholder’s death and usually applies to the first two years of a policy. During this timeframe, the life insurance contract enables insurers to deny claims for a variety of reasons, including suicide or performing an illegal act.

The incontestability clause kicks in once the contestability clause expires. Once incontestability takes over, only serious infractions – such as fraud or misrepresentations – are considered grounds for denial of the claim. The types of infractions that may lead to a death benefit claim denial will vary from company to company.

Notably, the exclusionary period restarts when changes are made to the life insurance policy, even if the insurer does not change. For example, converting two separate term life insurance policies to a single policy with a larger payout value typically initiates the start of another exclusionary period of two to three years. Maintaining the same death benefit and converting from a term life insurance policy to a whole life insurance policy should not reset the exclusionary period.

As long as the contestability and suicide clauses have expired, and there is no evidence of misrepresentation or fraud, suicide should be covered and the death benefit paid to the beneficiary.

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How does group life insurance treat suicide?

Group life insurance, the type of coverage provided as a workplace benefit, typically pays a death benefit on suicide claims without the two-year contestability restriction.

In cases of a private purchase of supplemental life insurance, typically offered through an employer, professional organization or other entity, a contestability clause likely applies. Contractually speaking, insurers investigate claims and possess a wide latitude for denial of a claim in the first two years of the policy’s effective date.

How do life insurance payouts work for suicide?

After the exclusionary period, if a policyholder dies by suicide, the policy usually pays a death benefit to the beneficiary just as it would for death from any other insurable cause.

A policyholder’s suicide during the exclusionary period provides no payout of the death benefit. Very often, however, life insurers pay out the amount of premiums paid on the policy minus any premiums owed before the policyholder’s death. Insurers can also subtract loan amounts on any death benefit payout on permanent policies.

What do you do if your life insurance claim is denied?

If the life insurance provider suspects that the insured died by suicide or another uninsurable cause during the exclusionary period, it has the right to contest or deny the claim. But, as the beneficiary, you may also contest the insurer’s decision, although doing so successfully may require some preparation on your part.

1. Wait for confirmation of claim denial

Life insurers typically defer to law enforcement or to medical examiners to declare an insured’s cause of death. But, if the company has reason to believe that the insured’s cause of death would void a beneficiary’s claim to the death benefit, it may undertake its own investigation. During the investigation, the insurance provider might consider the following relevant information:

  • Autopsy report
  • Death certificate
  • Drug or alcohol abuse
  • Evidence of illegal behavior
  • Family and friends or witness testimony
  • Health history and medications, including psychiatric records
  • Possible suicide note
  • Weapons purchases

After it concludes its investigation, the insurer will generally issue a claims denial letter that states its reason for denying the death benefit. If you intend to dispute the insurer’s decision, this claims denial letter may be useful during the appeals process.

2. Check the insured’s application for misrepresentations

Misrepresentations are a common reason why life insurance claims are denied. Typically, misrepresentations refer to personal characteristics that the insured fails to disclose to their life insurance provider when they applied for coverage. For example, if the insured is a lifelong smoker or has a chronic condition like a heart murmur, but does not inform their provider of these conditions when opening their policy and the provider discovers them during its investigation, it could be grounds for claims denial.

As the beneficiary, if your claim to the death benefit was denied, it may be helpful to review the insured’s initial life insurance application to look for misrepresentations. Keep in mind that denials do not always pertain to health; inaccurate information about the insured’s income level and immigration status could also render an insured’s life insurance policy void.

3. Consult state laws

Some states’ insurance regulations provide protections to beneficiaries. Check the applicable state laws around life insurance contestability and determine rules around exclusionary periods. States also impose varying restrictions around contesting contracts, which limits the window to overturn a denial. Additionally, some states restrict the application of new suicide clauses in converted policies.

4. Gather relevant materials and contact the insurance provider

Contacting the insured’s life insurance provider directly can be an effective way to go about the appeals process. Having relevant materials on hand such as proof of premium payments, medical documents or possibly even an autopsy report may help move the process along. Generally, the life insurance provider will communicate which documents it needs from beneficiaries in order to begin the appeals process.

Frequently asked questions

    • The best life insurance policy will depend on the needs of each individual policyholder. Term life policies provide coverage for short periods of time, typically between five and 30 years. Whole life (permanent) policies, on the other hand, provide coverage through the end of the insured’s life as long as premiums are paid. Talking to an insurance agent or financial planner may help you determine the best coverage type for your needs.
    • Life insurance policies can often be paid in monthly installments or in annual payments. Different insurers offer a variety of plans. The cost of life insurance varies depending on each policyholder’s specific circumstances and amount of coverage they choose.
    • If a person is deemed terminally ill, they may have the option to legally and voluntarily end their life on their own terms. Although “death with dignity” is allowed in several states, it could still be deemed a suicide by a life insurance provider if it occurs during the exclusionary period. In this instance, it is best to review the insured’s policy in-depth and contact a licensed life insurance agent to verify if the policy will pay out a death benefit in these circumstances.