More than 5.4 million people are survivors of suicide loss in the U.S. Losing a loved one this way can be devastating and confusing. Not only do you need to mourn, but you often need to deal with the practical and financial realities of death, like replacing your loved one’s lost income and planning and paying for a funeral or memorial service. Facing a denied life insurance claim can make these already difficult tasks seem impossible . Here’s what you need to know about life insurance if the cause of death is suicide.
Does Life Insurance Pay After a Suicide Death?
Whether the death benefit will be paid after a suicide usually depends on when the death occurs. It’s important to know that if a policy is purchased within two years of a suicide, the death benefit may not be paid. Whether a claim is paid out in these cases depends on how long the policy’s incontestability period is and whether it has a suicide provision.
The Incontestability Clause
The two-year mark is important because it frequently marks the end of the policy’s contestable period. During this time, the life insurance company can deny a death benefit claim for material misrepresentation on the application, or if the applicant withheld information that would have affected the insurance company’s decision to issue the policy. Material misrepresentation might include lying about a diagnosed illness, for example. However, once the period expires, the insurance company can only challenge a claim in cases of fraud. For instance, suppose you make policy payments for years on a policy without an incontestability clause; your spouse makes a claim after your death and the insurance company denies it because you misspelled something on the application. This clause is intended to prevent that sort of situation. Once the set amount of time has passed, a claim becomes “incontestable.” In addition to this clause, a life insurance policy may also have a specific suicide provision or clause.
The Suicide Provision
Some policies have a provision that the death benefit won’t be paid if the cause of death is suicide—typically within the first two years from the date the policy was issued. Such a provision might state, however, that the premiums paid into the policy are to be returned to the beneficiary.
Additional Clauses
Life insurance policies might include other clauses that exclude payments for death as a result of:
Aviation accidentsIllegal activitiesSubstance abuse
When a Suicide Death Benefit Claim Is Paid
If the policy’s suicide clause has expired (typically after two years) and the contestability period has expired (also typically after two years), an insurance policy is likely to honor the death benefit claim. However, even if a policy doesn’t have a specific suicide clause, it still could choose to investigate a claim it felt questionable during the contestability period. Though this might not result in an ultimate denial of the claim, it could significantly delay the payment of the death benefit causing frustration and undue hardship.
When a Suicide Death Benefit Claim Is Denied
If the policy has a suicide clause and death is the result of suicide before that clause expires, it’s highly unlikely a claim would be honored and the death benefit paid. This span of time is usually two years. However, there’s an important caveat to that. If the life insurance policy lapses and is reinstated, the suicide clause and contestability period would likely begin again from the time of reinstatement. For example, suppose you lost your job and couldn’t pay your policy’s premium. As a result, your insurance policy lapses. If, a year later, you wanted to (and the insurer allowed you to) reinstate the policy, the contestability period and suicide clause could start all over again, even though you’d previously owned the policy for years. But even if an insurance policy doesn’t have a suicide clause, a claim could still be denied during the contestability period. This could happen if the insurer’s investigation found evidence that the person lied on their application or died during an illegal activity or as the result of substance abuse.
The Bottom Line
If you’ve lost a loved one to suicide and are struggling with a life insurance policy claim, help is available. Alliance for Hope and Friends for Survival are two organizations offering support and resources to survivors. Remember that caring for yourself will ultimately help you accomplish the tasks you need to during this time. If you’re wondering under what circumstances your own policy will pay out, ask your insurance agent about your policy’s details. And if you’re having suicidal thoughts, contact the National Suicide Prevention Lifeline at 1-800-273-8255 for support and assistance from a trained counselor. If you or a loved one are in immediate danger, call 911.
