How Suicide Affect Life Insurance Payouts: What You Need to Know

How Suicide Affect Life Insurance Payouts: What You Need to Know

Did you know that suicide is the 10th leading cause of death worldwide, claiming over 700,000 lives every year?

Suicide is a tragic and complex phenomenon that affects not only the individuals who take their own lives but also their loved ones who are left behind.

One of the many challenges that survivors face is dealing with the financial implications of losing a family member, especially if they have a life insurance policy.

Life insurance is a contract between an insurer and a policyholder where the insurer agrees to pay a sum of money to the beneficiaries upon the insured person’s death in exchange for regular premiums.

Life insurance can provide financial security and peace of mind for the policyholder and their dependents.

However, some other factors, including the cause of death, may also have an impact.

In this article, we will explore how suicide impacts life insurance payouts and what you need to know if you or someone you care about has a life insurance policy and is struggling with suicidal thoughts.

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How does suicide affect life insurance payouts? Learn the basics, the exceptions, and the resources in this comprehensive guide. (Image by macrovector on Freepik)

Life Insurance and Suicide

Life insurance is a way of protecting your loved ones from the financial burden of your death.

There are different types of life insurance, such as term, whole, universal, and variable.

However, regardless of the type of life insurance you have, you should be aware of the terms and conditions of your policy, especially the exclusion clauses.

Exclusion clauses limit or exclude the insurer’s liability under certain circumstances.

For example, some common exclusion clauses are for deaths caused by war, terrorism, criminal acts, or hazardous activities.

One of the most important exclusion clauses to understand is the suicide exclusion clause.

This clause states that the insurer will not pay the death benefit if the insured person dies by suicide within a specified period after purchasing the policy.

This period is usually one or two years, depending on the jurisdiction and the policy.

The purpose of this clause is to prevent fraud and moral hazard, where people buy life insurance policies to kill themselves and leave the money to their beneficiaries.

If the insured person dies by suicide within the exclusion period, the insurer will usually refund the premiums paid to the beneficiaries, but not the full death benefit.

However, if the insured person dies by suicide after the exclusion period, the insurer will pay the death benefit as normal, unless there are other grounds for contesting the claim.

The insurer has the right to investigate any claim that involves suicide and may require evidence such as a death certificate, a police report, a medical history, or a coroner’s report.

The impact of suicide on life insurance payouts can be devastating for the beneficiaries, who may face not only emotional trauma but also financial hardship.

Exceptions and Complexities

While the suicide exclusion clause is a common and straightforward provision in most life insurance policies, there are some exceptions and complexities that might affect the outcome of a suicide-related claim.

Some of these are:

  • Pre-existing mental health conditions: If the insured person had a diagnosed or treated mental health condition before buying the policy, the insurer may waive the suicide exclusion clause, depending on the severity and duration of the condition and the disclosure and consent of the policyholder.
  • Contestability periods: This is a period, usually two years, after the purchase of the policy, during which the insurer can contest any claim for any reason, not just suicide. If the insurer finds any evidence of fraud, misrepresentation, or non-disclosure by the policyholder, they can deny or reduce the payout, or cancel the policy altogether. This period is different from the suicide exclusion period.
  • Legal nuances: The legal definition and interpretation of suicide may vary depending on the jurisdiction and the circumstances of the death. Some jurisdictions may also have laws that override the suicide exclusion clause, such as the incontestability statute, which prevents the insurer from contesting any claim after a certain period, usually two years, regardless of the cause of death.
  • Other potential complications: There may be other factors that might influence the payout, such as the type of policy, the beneficiary designation, the policy assignment, or the policy conversion.

As you can see, suicide claims are not always simple and may involve complex legal and financial aspects that require expert advice.

Therefore, it is advisable to consult a professional financial advisor or a legal expert before buying a policy, making a claim, or contesting a claim.

Alternatives and Resources

While life insurance can be a valuable tool for protecting your loved ones from the financial consequences of your death, it is not the only option available.

There are other ways to plan for your financial future, such as:

  • Saving and investing: You can create a savings account or an investment portfolio that can generate income and growth for your beneficiaries. You can also designate a beneficiary or a trustee for your account or portfolio who can access the funds after your death.
  • Estate planning: You can create a will or a trust that specifies how you want your assets and liabilities to be distributed after your death. You can also appoint an executor or a trustee who can manage your estate and carry out your wishes.
  • Social Security and pension: You may be eligible for social security or pension benefits that can provide income for your dependents after your death. You can check with your employer or the government agency that administers your benefits to find out the eligibility and amount of the benefits.

However, more important than planning for your financial future is taking care of your mental health and well-being.

If you are struggling with suicidal thoughts, you are not alone, and there is hope and help available.

Many resources and support networks can assist you:

Suicide prevention hotlines:

  • USA: 1-800-273-8255
  • UK: 116 123
  • Canada: 1-833-456-4566
  • Australia: 13 11 14
  • India: +91 22 2754 6669
  • Global: +1 800 273 8255

Online chat and text services:

  • USA: Crisis Text Line
  • UK: Shout
  • Canada: Crisis Services Canada
  • Australia: Lifeline
  • India: Aasra
  • Global: IMALIVE

Mental health professionals:

  • USA: Psychology Today
  • UK: Counselling Directory
  • Canada: Canadian Psychological Association
  • Australia: Australian Psychological Society
  • India: Indian Association of Clinical Psychologists
  • Global: International Association for Suicide Prevention


Will life insurance pay for suicide? The answer to this question is simply yes.

The insurer will pay the beneficiaries if the suicide takes place after the end of the suicide exclusion period.

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