Does Life Insurance Cover Suicide?

COVID-19 and the community’s response to the pandemic have resulted in more mental health issues over the past year than before. Suicidal tendencies and attempts have risen in 2020, particularly among the younger population according to this report.

Suicide refers to the death of person caused by self-inflicted injury. The reality of suicide is that it not only results in one person’s death, but also leaves behind loved ones who suffer unbelivable loss and tragedy for the rest of their lives.

What does suicide mean in terms of life insurance? Will your life insurance policy cover your beneficiaries or family in the face of suicide? Or will they have to deal with devastating loss, handle property issues, and pay off outstanding debt on their own?

Suicide can complicate matters. There’s always the possibility that someone could take out a life insurance policy with the intention of committing suicide soon after, to ensure that their loved ones receive death benefits. For this reason, most insurance companies protect themselves by refusing to payout death benefits claims if a suicide occurs within the first two years of a person’s life insurance policy.

If a suicide happens after this two-year period (officially known as the ‘suicide clause’), life insurance companies are obliged to pay out the death benefits to the beneficiaries. If it happens within the first two years, beneficiaries may receive a refund of all of the premiums paid into the policy until that time.

Most insurers will require you to report mental health issues or related addictions in order to validate your policy. Never lie about terminal medical conditions or mental issues - your insurer will have the right to void your policy due to fraud and refuse claims payouts.

If some mental health concerns arise after you purchase a life insurance policy, your insurer might be forgiving and protect you from a rate increase. However, the way a life insurance provider responds to mental health and suicidal tendencies will vary from carrier to carrier.

Always make sure to read the fine print on an insurance policy - you and your loved ones deserve to be financially secure in the sudden event of tragic death and loss.

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