Does Suicide Make a Life Insurance Policy Void?

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There are many misconceptions about life insurance and suicide. Many people have the idea that life insurance suicide schemes used to work, but insurance companies now invalidate such claims.

“The truth is that it all depends on the policy,” says Mark D. DeBofsky, an insurance law attorney in Chicago. Suicide clauses can also vary by state law. To find out whether life insurance covers suicide, talk to a local insurance attorney.

What Are Life Insurance Policies?

Life insurance policies pay out claims to beneficiaries when the policyholder dies. Most people consider purchasing life insurance to provide for their family members if they pass away.

There are many different types of life insurance plans, including:

• Term life insurance. Covers a predetermined period of the policy, such as 10, 20, or 30 years. The insurance provider pays out benefits if you die during the coverage period. If you live past the term period, your policy expires.
• Whole life insurance. Whole life insurance does not expire as long as the policyholder continues to pay premiums. A portion of the premiums builds up over time, and the policyholder can cash out the insurance plan value while they are still alive.
• Group life insurance. One policy covers several people in a group, such as employees of a company.

Life insurance quotes will depend on several factors, such as family history, lifestyle, and physical and mental health conditions. What the insurance plan covers and policy terms all depend on the individual plan. To understand how life insurance works in the event of a suicide, you must review the individual policy documents.

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Suicide Clauses and Exclusion Periods

Insurance policies are like any contract: It’s all about what’s in the fine print. “It all depends on the language of the policy,” says Robert J. McKennon, an insurance and employee benefits attorney at McKennon Law Group in Newport Beach, California. “It’s one of the first things I look at.”

Many life insurance policies have a clause that excludes suicide, while other will pay out benefits regardless of suicide. However, most life insurance policies “have provisions that, if the insured commits suicide within the first two years, there won’t be payment,” says DeBofsky. If the policy has been in effect for more than two years and the insured commits suicide, the likelihood is that the coverage would remain in effect and the benefits paid.”

Even if a policy has a “suicide clause,” the law says that the language must be plain, clear, and conspicuous. “That’s a grey area,” McKennon says. Several cases have set precedent on what it means to be conspicuous, but it ultimately depends on what a judge decides. “And if the court thinks it’s not clear and conspicuous, the clause is not enforceable.”

Incontestability Clause and Contestability Period

Most life insurance policies have an incontestability clause, which allow the insurance company to deny a claim based on:

• Inaccurate information on the life insurance application
• The policyholder knew they had a pre-existing condition and didn’t disclose it to the underwriter

However, these provisions are typically only valid for a specified time period.

“All policies nationwide contain an incontestability provision. Within the first two years, an insurer can scrutinize the application,” says DeBofsky. “If there’s an omission or misrepresentation about prior health history, that could invalidate the coverage. After the policy has been in effect for two years, any statement made in the application can only defeat coverage if the statement was made fraudulently, which requires proof that they made a material misrepresentation with the intent to deceive.”

The insurer can deny your claim for fraudulent health information. “But if there’s a minor finding on an X-ray or blood test and the doctor says, ‘Don’t worry about it, it’s probably an artifact,’ and you omit that to find out, three years later, it was significant, that probably wouldn’t be fraudulent,” says DeBofsky.

Depending on the terminology of the clause, it may make an exception for fraud. “That someone intentionally withheld information, like a past history of mental illness or prior suicide attempts,” McKennon explains. Failing to provide such information puts a policyholder at risk of fraud and, therefore, no benefits.

It all depends on the language of the policy. It’s one of the first things I look at.

Cause of Death and Life Insurance

In some cases, there is a question of whether the death was accidental or a suicide. “There’s a legal presumption against suicide, and certainly if there’s no note, then it probably wasn’t suicide,” says DeBofsky.

The burden of proof in such cases is an interesting wrinkle, McKennon notes. If a policy excludes suicide, the life insurance company has to prove it was suicide. The company looks at all available information, including crime scene reports, medical records, death certificates, depositions of loved ones, etc. “It can make a difference in your case if the answer isn’t clear and can go either way. The party with the burden of proof could lose, and the insurance company always has the burden with respect to an exclusion in the policy.”

“We’re always fighting over whether there was an accident or not,” says DeBofsky. “We litigate a lot of those claims. For example, I filed one where the insured died after crashing a truck into a tree. They did a toxicology postmortem, and he was two-and-a-half times over the legal limit for alcohol. The insurance company wanted to deny the claim. But we were able to develop evidence that the truck had defective brakes and steering, so alcohol probably wasn’t a factor. It was a rural area on a dark night where the road takes a sharp turn.”

Payment of death benefits may only come after legal battles and appeals. Some insurance companies initially deny claims, hoping the family will not challenge the denial. You may need an insurance lawyer to take the insurance company to court to get your benefits.

Doctor-Assisted Suicide and Life Insurance Payouts

“States like California, Oregon, and Washington have assisted suicide laws,” says DeBofsky. “If you have been diagnosed with a terminal illness and don’t want to suffer to the very end, you can go to a doctor who will assist you in committing suicide. I have yet to see a reported decision on this, so I don’t know if an insurance company would take the position that it would fall under a suicide exclusion or not.”

Speculating on what might happen in such a claim, DeBofsky suggests the insurance company would pay out for these policies. The policyholder’s death is likely due to the underlying medical condition. Denying an assisted suicide claim could also be a public relations nightmare.

Legal Advice About Life Insurance Coverage

Every case depends on your policy and specific circumstances. Insurance attorneys deal with these questions regularly and understand local insurance laws. If you want to know what your policy covers and what’s excluded, talk to an experienced life insurance attorney for legal advice.