Term Life Insurance & Suicide

How do Life Insurance Companies Handle Death With Dignity Cases?

Talking about death is considered by many to be taboo. Fear of the unknown, how our loved ones will cope without us and uncertainty about what happens to our bodies and souls are a few reasons people give for avoiding the topic. Many just don’t feel comfortable talking about their inescapable demise. And while the majority of us avoid thinking or talking about death, others may think about it too much.

Suicide Statistics

According to the World Health Organization (WHO), one million people die each year globally by their own hand. The WHO also states suicide rates have gone up by 60% in the past 45 years. Their statistics from 2009 show the US reported between 6.5 and 13 suicides per 100,000 people. The latest National Vital Statistics Report shows the preliminary statistics for 2009, and suicide is ranked as the 10th leading cause of death in the US.

Term Life Insurance Policy Suicide Clause

Being in the top ten causes of death is pretty significant, which is why life insurance companies take notice and place a 2-year suicide clause on most term life insurance policies. The clause protects the company from having to pay claims for insured people who commit suicide during the first two years of their term life insurance policy, starting from the policy date. If a suicide does occur in the first two years of the policy, the life insurance company will return any premium payments that were made, but they will not pay the death benefit money.  After the 2-year clause is up, companies will pay death claims resulting from suicide. Be sure to carefully read your policy for the details of your specific contract, and always ask your agent for help if anything is unclear.

A term life insurance policy is intended to insure one’s life from an untimely death by natural or accidental causes. Many people are surprised to learn life insurance companies will pay death benefits for suicides after the first two years, as suicide is not looked at as being natural or accidental. Companies add the exclusion to the policy to protect themselves from the risk of immediate claims from suicide. A person who is planning to commit suicide is likely in a state of despair and might try to secure a term life insurance policy right before they commit the act. The 2-year exclusion is enough to dissuade most people from using the policy in this manner.

What about situations where the cause of death is due to negligence or risky behavior, such as dangerous drinking games or Russian Roulette? Suicide may not necessarily be the official cause of death for such behaviors, although it could be. If a death occurs during the 2-year suicide clause as a result of such behaviors, the life insurance company’s claims department will investigate the particular circumstances of the incident to determine if death proceeds are payable. The company will usually go along with the official cause of death as listed by authorities, but this is not always the case.

If you or someone you know is having suicidal thoughts, please get help as soon as possible. You can also learn more about suicide prevention here: http://bit.ly/2C04Xu.

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