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Learn about Life Insurance and Suicide
If someone commits suicide does their family get the death benefit payout from their life insurance policy?
It's a tragedy when someone commits suicide. We feel sorry for the victim, and it's devastating for their entire family and friends.
If the deceased person had a life insurance policy, the family members (beneficiaries) may wonder whether they are entitled to the death benefit.
That may depend on the state laws pertaining to life insurance and suicide, how long ago the life insurance policy was purchased, if the premiums were all paid up, and any suicide exclusion in the life insurance contract.
What is the Statutory Exclusion Clause for Suicide?
The statutory clause varies in each state. It provides that insurers must pay death benefits in the event of the insured’s suicide after a certain period of time has elapsed since purchasing the life insurance policy. This is the contestable period. Most states have a two-year exclusion period. Some provide only one year, such as, Colorado or Pennsylvania.
The exclusion clause for suicide in the life insurance policy may read:
"If the insured shall commit suicide while sane or insane within two years from the date of issue of the life insurance policy, the liability of the insurance company under this policy shall be limited to the premiums actually paid to date, less any indebtedness".
Generally, the insurer will Return Premiums paid if suicide takes place within the exclusion period. If the suicide occurs after the exclusion period, then the Death Benefit of the life insurance policy will be distributed, provided no other exclusions apply (such as premiums not having been paid).
Why is there a Suicide Exclusion Period?
It is not the intent of life insurance policies to provide death benefits for suicide. However, the states (which regulate life insurance) have recognized that people can be mentally healthy when they buy a life insurance policy, continue to pay premiums for several years and later become depressed and commit suicide. The exclusion of suicide has been limited so that people and their family in these situations don’t end up being penalized by losing the death benefit of their life insurance contract.
Usually a two year limitation applies for suicide exclusions. It is deemed that keeping up the resolve to die for two years is a rare occurrence, even when considerable money is at stake.
Who Regulates The Exclusion for Suicide in Life Insurance?
Life insurance policies are regulated by the state the insured person lives in, so it depends first on state regulations for life insurance.
Assuming there is no law to the contrary, most life insurance policies will pay out in the case of suicide if the suicide occurs two years or more after taking out the life insurance policy.
The rationale for the 2 year time limit is that the two year waiting period will dissuade people from using a life insurance policy to provide for loved ones should the insured be depressed enough to actually consider immediate suicide.
The two year period also provides for the case when the person had no intention of committing suicide when the policy was taken out but became despondent enough later in life to take his or her own life.
In addition, the suicide exclusion may depend on the type of life insurance policy, how long the life insurance has been in effect, and what riders are on the life insurance policy that may add or remove coverage.
You will find that most life insurance policies have a suicide clause. There are some life insurance policies that don’t exclude suicide; however, they are often more expensive so be sure to evaluate your options before choosing your life insurance plan.
In some cases there is an exception to the 2-year suicide clause for example, some employer-provided group life insurance policies may or may not have such exclusions.
Most life insurance policies include an "exclusion period" for suicide This is a period of time after the life insurance policy is first purchased, during which payment for claim of death can be disputed. If the person on whom the policy is written dies during the exclusion period, the life insurance company will investigate the death to determine if there was any medical or other information that was not disclosed when the policy was purchased. Most exclusion periods for a period of two years.
As part of this exclusionary period, most life insurance policies include suicide clauses. This type of clause usually specifies that the life insurance company will not pay out a claim on a life insurance policy if the person commits suicide within the exclusion period.
It's worth reviewing the small print in the policy to determine if there is a suicide clause. It can be no more than a sentence or two, and it may not include the word "suicide" --- it may instead talk about "intentional self destruction" or another legal phrase. If payment for a claim of death is denied, the money you paid in premiums may be returned.
Burden of Proof
If the death of the insured person occurs within the suicide exclusion period, and it is not a clear-cut case of suicide, the life insurance company may still decide to contest the payout of the death benefit. However, the burden of proof is on the life insurer to demonstrate that the death was suicide and not an accident.
Life insurance is regulated at the state level, and each state differs as to the exclusions and conditions it allows life insurance companies to place on their life insurance policies.
In Colorado, for instance, if the suicide occurs more than one year from the time the life insurance policy was taken out, the insurance company cannot avoid paying out the death benefit from the life insurance policy.
Social Security Survivor Benefits for Suicide?
The Social Security Administration (SSA) offers survivors benefits to the widow or children of the deceased person who committed suicide.
The widow and children must meet SSA guidelines to receive the death benefits, not the deceased. Spouses and children of individuals who committed suicide can collect survivor’s benefits, with one exception.
The SSA prohibits spouses from collecting survivor’s benefits in the case of a suicide in one situation. The deceased and the surviving spouse must have been married for at least nine months before the suicide occurred; if the deceased committed suicide within nine months of the wedding day, the surviving spouse cannot collect death benefits.
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Resources for Life Insurance and Suicide
eHow Article - Is Life Insurance Void for Suicides?
Wiki Answers - Does Social Security Pay Survivor Benefits for Suicides?