How do life insurance companies handle death with dignity cases?

Learn how choosing death with dignity might impact your life insurance policy and your beneficiaries.

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites.

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Written by Tim Bain
Founder & Life Insurance Agent Tim Bain

Benjamin Carr was a licensed insurance agent in Georgia and has two years' experience in life, health, property and casualty coverage. He has worked with State Farm and other risk management firms. He is also a strategic writer and editor with a background in branding, marketing, and quality assurance. He has been in military newsrooms — literally on the frontline of journalism.

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Reviewed by Benji Carr
Former Licensed Life Insurance Agent Benji Carr

UPDATED: May 23, 2022

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What to know:

  • Currently, Washington D.C. as  well as several states have death with dignity laws
  • Life insurance companies can pay out compensation to the beneficiaries when the insured takes their own life after the exclusionary period is over
  • If someone dies within the exclusionary period, their beneficiaries may not receive compensation

Death with dignity or assisted suicide is a controversial matter. Does life belong to its owner, or do those around them also have a stake in their loved one’s well-being? What about those with terminal illnesses? Should they have to prolong their suffering?

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How do life insurance companies handle assisted suicide?

For life insurance companies, the death-with-dignity issue is even more complicated. Typically, life insurance involves the insured paying premiums while alive to ensure their beneficiaries receive a death benefit when they pass on. But it’s a different ballgame when someone opts for coverage and chooses death with dignity or suicide.

So, how do life insurance companies handle death with dignity cases? Is there such a thing as death with dignity quotes? And can choose death with dignity cause beneficiaries to miss out on the death benefits?

Death With Dignity States

In all states, patients can withhold treatment and die. But in most states, patients cannot end their lives on their own or with the help of a doctor.

However, in death with dignity states, patients can actively plan for their deaths. These states include:

  • Vermont
  • Oregon
  • Washington
  • Montana
  • Hawaii
  • California
  • Colorado
  • New Jersey
  • Washington D.C.
  • Maine

In such states, the rules concerning insurance payouts may be different. However, insurers usually insert their own clauses in death with dignity cases which may affect the distribution of death benefits. And the contracts vary by state and the insurance company.

What is the exclusionary period for life insurance?

There are two types of life insurance policies: permanent life insurance and term life insurance. The former has no end date and will provide you with coverage for your entire life, paying the benefit to your beneficiaries upon your death.

On the other hand, term life insurance pays out the benefit if you die within the stated term during which you are covered. After that, it expires. But one thing most of these insurance policies have in common is an exclusionary or contestability period.

If the insured dies during the exclusionary period, their beneficiaries will not be given the life insurance death benefit unless the insurance company is satisfied that no fraud took place. This varies by state, insurer, and policy, so pay close attention.

The contestability period is put in place to safeguard the insurance company from insurance fraud.

For example, if you have a terminal illness you don’t disclose, are a smoker, or deal with depression, these issues will work against your beneficiaries when they file a claim if you die within the exclusionary period. That’s because these conditions increase your chances of dying and, thus, make it more likely that the insurer will have to pay out the death benefit even if you only pay for a few premiums.

Any death that takes place during the exclusionary period will require extensive investigation. And it may result in lower payouts or policy claim cancellation.

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What are life insurance exclusions?

Exclusions are the hazards your life insurance company will not cover. For example, many life insurance companies refuse to pay out beneficiaries if the insured commits suicide during the first two years of a policy. That two-year period is the exclusionary period and suicide is the hazard that will not be covered within that time.

In cases where someone buys insurance and dies by suicide within the contestability period, some insurance carriers may refund the premiums to the beneficiaries, but they are unlikely to receive the death benefit. However, when the insured dies after the two-year period, life insurance companies usually pay the benefit to the designated beneficiaries so long as the claim is valid.

Exclusions, such as those represented by the suicide clause, reduce the number of claims from the beneficiaries of those who buy life insurance knowing death is imminent.

What is the waiting period for life insurance?

The waiting period is the specified time — usually about 60 to 90 days from the day you purchase coverage — when no one can claim benefits. When someone buys life insurance and dies within that period, regardless of the cause of death, beneficiaries won’t receive any payment since the coverage has not been fully activated yet.

Final Thoughts on How Choosing Death With Dignity May Impact Your Coverage

There is no such thing as death with dignity quotes, but there are regular insurance quotes you can get for free. Even in death with dignity states, choosing death may void your life insurance coverage. If you die within the contestability period, your beneficiaries may only get a refund of your premiums or nothing at all. Alternatively, the insurer may pay out the death benefit if someone dies after the exclusionary period is complete.

However, the payment of a death benefit also depends on whether there is a suicide clause or not. For policies with this kind of clause, choosing death may invalidate the entire policy, especially if the insured did not disclose pre-existing conditions at the time of buying the cover.

Since many insurance companies tend to include a suicide clause, it would be best for the insured to seek other avenues of bequeathing one’s beneficiaries an inheritance. And those avenues shouldn’t involve them losing a loved one and getting a death benefit.*Death With Dignity National Center. Death With Dignity Around The U.S. #. Accessed 11.24.2014

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