Does Life Insurance Pay For Suicidal Death?
Does life insurance pay for suicidal death? This is a question that many could be wondering about. The suicide of a close person is one of the most dramatic situations that can occur in a family and the insurance industry is not insensitive to these types of circumstances. Suicide is one of the most taboo subjects in our society.
However, for years it has been the leading cause of unnatural death in many countries. It is a more common circumstance than we would like to admit and, therefore, it must be taken into account.
One Year Established Contract
In the event that this terrible event occurs before the term established in the insurance contract, the insurer may refuse to compensate the beneficiaries. However, if the suicide occurs as a result of an unexpected impulse from the insured person, and once the period of exclusion from coverage has passed, the Insurance will cover the death and pay the compensation. This clause is present in practically all life insurance contracts:
“Unless otherwise agreed, the risk of suicide of the insured will be covered after one year of the moment of the conclusion of the contract.”
For these purposes, suicide is understood to be death consciously and voluntarily caused by the insured himself. Under this law, insurers cover suicide as long as it occurs one year after signing the insurance. In other words, the policy must have been paid for at least one year so that the beneficiaries can collect it.
Be aware: If you are still wondering “Does life insurance pay for suicidal death,” it is important to note that if when taking out life insurance, the insured denies having a serious illness, and suicide occurs after the year, the beneficiaries may have problems accessing their compensation.
Avoiding Fraud
When does life insurance cover suicide? In life insurance plans, there is what is known as ‘suicide exclusion.’ This clause limits the payment of the policy in the event that the insured commits suicide during the first year of the policy.
Therefore, if the insurance policy does not include a longer term clause, it is understood that the insurer must cover suicide as long as it occurs after one year of having contracted the policy.
Insurance companies take advantage of this clause during the first year of the life of the contract for a very simple reason: the intention in any case is to avoid fraud.
This clause protects insurers from excessive demands that are made due to suicides committed by policyholders and also from fraud committed by those who buy a life policy in order to later commit suicide and thus benefit their relatives by allowing them to collect the amounts stipulated therein.
The Investigation
After one year from the formalization of the policy, it is possible that the beneficiaries can collect the policy, but premium payments have to be current. The insurer will carry out an exhaustive investigation of everything that surrounds the claim, though. In this way, the insurer can rule out that it is not the cause of intentional and planned fraud from the time the policy was contracted.
Bear in mind: If the insurer's investigation finally concludes that fraud has been committed, it will not pay the claim. Another important fact to keep in mind is that if there is any wrong information in the policy.
For example, if the insured person denied having a medical disease; possible one that is terminal and all along planned to take his or her own life, the insurer may refuse to cover the claim, arguing that had he known the real risk.
Why One Year?
Why do you only cover from one year? This requirement was established to prevent fraud against insurers. Thus, a person who had in mind to kill himself is prevented from taking out insurance just before his family receives the money.
Can I buy an insurance that also covers suicide in the first year?
By default, insurers only cover from the first year. However, the Insurance Contract Law also states that something else can be agreed between the insured and the company.
Thus, you can buy insurance that also covers suicide in the first year, although it is a very rare product. Also, keep in mind that insurers may refuse to cover a person. Therefore, it is unlikely that they will want to take such a great risk in a new policy.
Psychological Problems
Companies have the right to do an investigation to determine all the circumstances of the case.
This means that the company will do tests and ask questions about the event, so it can be an uncomfortable process for the family that is grieving. If the investigation determines that the suicide was caused by depression after losing a job, the beneficiaries will receive the money.
Psychological problems are considered a cause outside the insurance and, therefore, would not prevent the collection of the money. However, here it is very important to take into account whether the insured correctly reported that he had these psychological problems.
Being Untruthful
What if the insured lied on the health questionnaire? If it is proven that you lied on the health questionnaire, the beneficiaries may not receive the money. When someone takes out insurance, the most common thing is that the insurer gives a health questionnaire, which must be filled out before signing the policy. Some insurance companies will even give a medical checkup.
The health questionnaire is not required by law, although it is a very common procedure to determine the level of risk the insurance company faces.
It is something obvious because the risk of premature death will be higher if someone has heart problems, for example. In the questionnaire the insurer will ask questions related to the state of health: weight, height, addictions, diseases, medication and more.
The policyholders are obliged to report all circumstances that may influence the risk assessment. This means that if the insured died and had lied on the health questionnaire, the company will not have to compensate the family.
For example, if an insured commits suicide due to a mental illness that he concealed from the company, his beneficiaries will not be entitled to receive compensation.
Mental Illnes
What if the suicide is caused by a disease that the insured was not aware of? The law governing insurance contracts indicates that the policyholder must inform the company of "all circumstances known to him that may influence the risk assessment." Obviously, in the health questionnaire you can only answer what you know.
Therefore, if a person commits suicide due to a mental illness that they do not know they have, it will not be considered deception or fraud and therefore compensation will be paid.
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Omitting Information
What if the insurer does not ask in the health questionnaire about the disease that led to suicide?
The law is very clear in this regard: If the insurer does not submit the insured to a health questionnaire, it will not be able to allege any circumstance related to the lack of information on the insured's risk.
In other words, if the company doesn't ask you if you have heart problems, you don't have to tell them. Take the example of a person who suffers from a mental illness that leads him to commit suicide. If the company did not ask you on the mental health questionnaire, the beneficiaries will be entitled to receive the money and it will not be considered fraud. It will not matter if the insured knew he was sick or not, since the insurer did not ask him directly.
Conclusion
The wish of all is that our life insurance never has to pay our beneficiaries, because it means that nothing has happened to us. However, it is important to consider all the possibilities. Therefore, even if you do not want to think about it, you must know how life insurance covers suicide when you decide to secure an insurance contract.
It is also important for you to do a life insurance comparison of different insurers. We hope that we have answered the question, “Does life insurance pay for suicidal death.” If not, you can visit the Goalry online platform, where you can find more information at the Insurry store.