Is Life Insurance Void for Suicides?

Suicide of a loved one is one of the most distressing situations any family can confront. It may also be complicated by worries over the life insurance carried by the deceased. Whether an insurance company will pay out after a suicide may depend on clauses in the policy and on state law.

Exclusion Period

Most life insurance policies include an “exclusion period.” This is a period of time after the policy is first purchased, during which payment can be disputed. If the person on whom the policy is written dies during the exclusion period, the insurance company will investigate the death to determine if there was any medical or other information that was not disclosed when the policy was purchased. Most exclusion periods are two years.

Suicide Clause

As part of this exclusionary period, most policies include suicide clauses. This type of clause usually specifies definitively that the company will not pay out on a policy if the person commits suicide within the exclusion period. It’s worth reviewing the small print in the policy to determine if there is a suicide clause. It can be no more than a sentence or two, and it may not include the word “suicide” — it may instead talk about “intentional self destruction” or another legal phrase. If payment is then denied, the money you paid in premiums will be returned.

Burden of Proof

If the death occurs within the exclusion period, and it is not a clear-cut case of suicide, the insurance company may still decide to contest the payout. However, the burden of proof is on the insurer to demonstrate that the death was suicide and not accidental.

State Law

Life insurance is regulated at the state level, and each state differs as to the exclusions and conditions it allows insurance companies to place on policies. In Colorado, for instance, if the suicide occurs more than one year from the time the policy was taken out, the company cannot avoid paying out. It’s essential to check your state law on this matter.