Does a life insurance policy cover suicide as a cause of death?

Every year in the U.S, around 250,000 people become suicide survivors. Losing a loved one through suicide is among the most painful situations to face. Most people find it challenging to deal with all the questions that come with such a loss. A denied life insurance claim due to suicide is very devastating. Along with the pain of losing someone you love, there are financial issues to address too. When such a situation occurs, most people wonder whether the life insurance policy of the deceased will cover the death. Generally, the plan will cover your loved ones if;

• The employer paid for the life insurance policy
• The person had an individual insurance policy, which went into effect two or more years ago (one year in some states)

However, even if the insurance company does not cover death, it is crucial to follow up. If the insurance company denies the claim, it still owes the beneficiary a return of the premiums that were paid by the policyholder.

Individual Life Insurance and Suicide

The type of coverage (individual versus employer-paid group insurance) will determine how an insurance company will handle suicide. In an individual policy, you buy it on your own. When it comes to group life insurance, your employer buys the plan for you. Individual policies contain a clause that denies payment if the policyholder commits suicide within one or two years (depending on your state) after the plan goes into effect. This period is a way of preventing people who intend to commit suicide from purchasing policies. If the policyholder commits suicide after this period, the company pays the beneficiary as it would in case the person died from an illness or any insured causes.

In case the suicide occurs within the excluded period, the company does not cover death. Instead, the insurance company will return the premiums but will subtract any premiums that the policyholder owed before death. For instance, if the policy is a whole life, and the person had an outstanding loan against the policy’s cash value, the insurer will subtract this loan. The remaining premium will then go to the beneficiary.

Group Life Insurance

Group life insurance policies do not have a suicide clause. If the person had a group life or free insurance policy, the insurer would pay the beneficiary. You can contact the employer’s human resource department for a guide on how to file a claim. Nevertheless, group life insurance also excludes the first one or two years. If the suicide occurs within this period, the insurer returns the premiums that the employer had paid.

If you are dealing with the aftermath of a suicide, do not allow the cause of death to prevent you from filing a claim. Remember that you are among millions of other people who have the same issue. Although this article clarifies the impact of suicide in the payment of a life insurance policy, you can read more about life insurance and suicide to be on the informative side.