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Does Life Insurance Cover Suicide?

Does Life Insurance Cover Suicide?
Elizabeth Rivelli
Updated November 8, 2021
3 Min Read

Life insurance has many benefits, but one of the most common uses is to financially support your family members in the event of your death. If you want to financially protect your loved ones in case the unthinkable happens, purchasing a life insurance policy can be valuable. 

Before you purchase life insurance, however, it’s important to know what is and isn’t covered. Although it seems rather morbid, certain causes of death may not be fully covered by life insurance. In addition, there is typically a waiting period before a life insurance beneficiary will be eligible for the death benefit if the policyholder passes away.

Does life insurance pay for suicidal death?

In the United States, the rate of suicide is sadly climbing. In 2021, suicide was found to be the 10th leading cause of death overall and the second leading cause of death for individuals between the ages of 10 and 34.

If you have a life insurance policy, suicide is usually covered. However, as a beneficiary, you may not be entitled to the full death benefit if the main policyholder dies from suicide. Most policies include something called a suicide clause, which we’ll talk more about later.

One of the biggest reasons why a life insurance death benefit may be limited in the event of suicide is that insurance carriers do not want to incentivize people to take their own lives. For instance, someone who was having suicidal thoughts might not worry about leaving their loved ones without financial support if they knew their life insurance policy would cover them.

When does life insurance cover suicide?

Typically, a life insurance policy will cover suicide if the policyholder dies after the two-year exclusion period ends. In this case, the beneficiary will receive the full death benefit, assuming that the policyholder did not lie about their mental health diagnoses on their life insurance application. 

When does life insurance not cover suicide?

Most life insurance policies have an Incontestability Clause, which remains in effect for two years following the policy’s effective date. This clause is essentially used to ensure that life insurance policyholders don’t lie on their application, and die within those two years from undisclosed conditions or underlying health issues.

If a policyholder passes away within the first two years, and it’s determined that they died from a condition they did not disclose on their life insurance application, their beneficiary may not be eligible to receive the full death benefit. In some cases, the beneficiary may get back the value of premiums paid into the policy, but not receive any amount of the death benefit.

For example, if a policyholder died by suicide within the first two years, and the insurance company learns that they did not disclose a history of clinical depression, the insurance company may not pay out the death benefit because the policyholder lied on their application. 

When applying for life insurance, it’s important to be truthful about current and past medical conditions. This also includes mental health diagnoses, which a physician will ask about during the life insurance medical exam

Life insurance suicide clause

Most life insurance policies include a suicide clause, which says that a policyholder’s beneficiary will not be eligible to receive the death benefit if the policyholder dies by suicide within the first two years of the policy. Depending on your location and insurance carrier, the exclusion period could be one year or three years.

The specific details of the clause depend on the type of policy you have. For instance, term and whole life insurance policies typically have a two-year suicide clause, but group life insurance through an employer usually doesn’t have one at all.

Here’s how it works. If you’re the beneficiary on a life insurance policy, and the policyholder dies by suicide after the first year, it’s unlikely that you will receive the full death benefit. You may receive compensation in other ways, like recouping a portion of the premiums paid into the policy. But if the person were to pass away after the fourth year, you would receive the full value of the death benefit. 

It’s worth noting that while every life insurance policy has an Incontestability Clause, suicide is the only cause of death that has its own exclusion period. So, for instance, if the policyholder died of a heart attack just six months after buying a policy, their beneficiary would automatically receive the full death benefit, assuming the policyholder did not withhold information on their application that contributed to their death.

How do life insurance payouts work for suicide?

Life insurance payouts after suicide work similarly to any other life insurance claim. When the policyholder passes away, their beneficiary will present the death certificate and an agent will start the claim process.

If the policyholder’s death took place after the two-year period, the beneficiary should be entitled to the full death benefit. If the person passed away before the suicide clause was up, an agent will talk to the beneficiary about what compensation they can receive.

With a suicide death, it’s possible that the life insurance company may decide to investigate the cause of death if the death certificate is inconclusive or raises questions. Because of this, it’s possible that a life insurance claim for suicide could take longer to settle than a claim resulting from another cause of death.

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