- Most companies won't pay death benefits if the insured dies by suicide within two years of buying the policy.
- Beneficiaries will receive the death benefit if death happens after the suicide clause timeframe.
- The contestability two year period is different than the suicide clause.
The Centers for Disease Control and Prevention reports that suicide rates have increased by 35% since 1999 and that suicide is the 10th most common cause of death in America.
Some people might think that life insurance policies don't cover death by suicide. However, most life insurance policies have what's called a suicide clause. This states that if the policyholder dies due to suicide within the first two years of their policy becoming effective, their policy won't cover suicide.
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 a 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: permanent life and term life. The difference between term and permanent life insurance is similar to the difference between renting (term life) and owning a home (permanent life). Term life provides coverage for a specific period, while permanent life insurance offers lifelong coverage and includes a cash value component.
Either can require a medical exam as part of the approval process known as underwriting.
Does life insurance cover suicide?
If the policyholder dies by suicide within the first two years of the policy, then the insurance won't pay a death benefit to your beneficiaries. If the death occurs after the two-year period, beneficiaries receive the death benefit unless other exclusions apply.
Insurance providers ask if you ever had mental illness or triggered mental health benefits, Mark Williams, CEO of Brokers International, told Business Insider. Williams said that providers also inquire if you've used antidepressants, been in therapy, or been hospitalized voluntarily or involuntarily. The answers to these questions will determine the terms and cost of your policy.
Contestability period vs. suicide clause
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 you lied on the application or failed to disclose important facts, the insurance company can invalidate the policy. As a result, your beneficiaries won't receive your death benefit.
If you've had a 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.
Suicide clause coverage limits and exceptions
Types of eligible policies
People with certain pre-existing mental health conditions may be ineligible for traditional life insurance. However, they may qualify for no medical exam life insurance through a simplified issue insurance policy. While this type of insurance doesn't require a medical exam, it usually requires a health questionnaire.
A guaranteed issue policy doesn't require a medical exam or health questionnaire. However, its premiums are higher than a simplified issue policy and it has coverage limitations. So, guaranteed may be better suited for those with terminal, chronic, or other severe cases.
Waiting periods for suicide coverage
As mentioned earlier, most insurers enforce the suicide clause. Your beneficiaries won't receive a death benefit if you die by suicide within the first two years of your policy.
Failure to disclose
Not all pre-existing conditions will make you ineligible for life insurance. However, failure to disclose certain conditions could result in your beneficiaries not receiving the death benefit.
State regulations
State variations in life insurance suicide exclusions also exist. For example, some states require insurers to cover physician-assisted suicide (also known as death with dignity or right-to-die) during the two-year exclusionary period. Check your policy documents or speak to your insurance company to determine the extent to which your insurer covers death by suicide.
Navigating claims related to suicide
Filing claims for life insurance after suicide is the same as any other death as long as it occurs after the two-year exclusionary period.
Beneficiaries must complete a claims form, which they obtain through their insurer's website or by calling the policyholder's insurance company. To complete the process, they'll need the policyholder's:
- Name
- Date of birth
- Date and cause of death
- State of residence
- Social Security number or policy number
- Death certificate
Mental health resources and support
Seeking help for mental health conditions not only improves your quality of life but can qualify you for better terms on your life insurance policy. For example, evidence of mental health management through regular treatment can put you in a lower mortality risk bracket, which lowers your premiums.
If you or someone you know is struggling with depression or anxiety or having suicidal thoughts, call or text 988 to speak to a representative from the Suicide & Crisis Lifeline.
FAQs
Most life insurance policies include a suicide clause. This excludes coverage if the death by suicide occurs within a specified period, often two years, after the policy is issued. After this period, your insurer may cover suicides.
The contestability period refers to the first two years of the life insurance policy which your insurer can contest or deny claims for misrepresentation on your application. For example, if you fail to disclose a past suicide attempt and you die during the contestability period, this can be grounds for your insurer to deny coverage.
Yes, if suicide occurs during the waiting period specified in the suicide clause, the policy may be voided, and premiums paid may be refunded to the estate or beneficiaries.
State laws can influence the specifics of your insurer's suicide provision. For example, some states have death with dignity laws that require insurers to cover physician-assisted suicides, even during the two-year waiting period.
Beneficiaries should be prepared for the insurance company to conduct a thorough review of the circumstances surrounding the policyholder's death. They should also know that most policies include a suicide clause, where death by suicide within the first two years of your policy is typically excluded from coverage.
