Does Suicide Void Life Insurance?

Life insurance is a safety net that provides financial support to families after the death of the breadwinner. It helps the family cope with the loss of a loved one and ensures the continuity of their living standards. However, there are certain circumstances under which life insurance may not be payable. One of the most common questions that people have is whether suicide voids life insurance. This article will explore the answer to this question, along with other related topics.

The Legal Aspects of Suicide and Life Insurance

When someone takes their own life, it is considered suicide. In most countries, including the US, suicide is not considered a natural cause of death. It is classified as a self-inflicted injury or death due to one’s own actions. As per the insurance policy, the insured person has a duty to disclose all relevant information at the time of signing the policy. Intentional self-harm is a critical information that the insurer should know. This information will determine whether the policy will be honored in case of the insured person’s death.

Life insurance policies have a suicide clause, which states that the policy benefits will not be payable in case of the policyholder’s suicide. The suicide clause usually takes effect within the initial two years (the contestability period) of the policy. During this period, the insurer has the right to investigate the circumstances surrounding the policyholder’s death to determine if the claim is legitimate or not. If the insurer finds that the policyholder’s death was due to suicide, they will not pay the claim.

The suicide clause is included in the policy to prevent suicide as a means to obtain life insurance benefits. It discourages people from taking out a policy with the intention of committing suicide, knowing that their family will benefit financially from their death.

Exceptions to the Suicide Clause

The suicide clause is not absolute, and there are exceptions to this clause. In some cases, the insurer may pay the claim in full, despite the policyholder’s suicide. These exceptions include:

Grace Period

If the policyholder commits suicide after the contestability period has ended, the insurer cannot deny the claim or refuse to pay the benefits. The grace period usually lasts for around 30 days. If the policyholder dies during this period, the benefits will be paid to the beneficiary.

Accidental Death Clause

If the policy has an accidental death clause, the insurer may pay the benefits if the policyholder’s death was caused by an accident. The insurer will investigate the death to determine if it was due to suicide or accident.

State Laws

In some states, such as California, the suicide clause is not valid. The insurer is obligated to pay the benefits, even if the policyholder commits suicide. This law applies only if the policy has been in effect for at least two years.

FAQ about Suicide and Life Insurance

Conclusion

Suicide is a sensitive issue, and life insurance companies take it seriously. The suicide clause in the policy protects the insurer from fraudulent claims and discourages people from taking out a policy with the intention of committing suicide. However, the clause is not absolute, and there are exceptions to it. It is essential to disclose all relevant information when taking out a life insurance policy, including any mental health conditions. If you are unsure about your policy’s terms and conditions, speak to your insurance agent or the insurance company for more information.