Life Insurance |
How the suicide clause works
Does Life Insurance Cover Suicide Attempts. Insurance companies want to prevent people from being motivated to commit suicide. This is why many life insurance policies have suicide clauses (also called suicide clauses).
This means that the insurer will increase the monthly premium that you pay for Life Insurance, to offset the perceived added risk of there being a claim.
According to the definition in its suicide clause, if the insured person dies due to suicide during the first two years of coverage (usually referred to as the exclusion period), the insurance company will usually not pay the death benefit. After the exclusion period ends, if the insured person dies due to suicide after that date, the beneficiary of the policy can get the death benefit.
In Colorado, Missouri, and North Dakota, the exclusion period is shorter; one year after the policy takes effect, if the insured person dies by suicide, the beneficiary is entitled to a death benefit.
Any changes to the policy (such as increasing the coverage or converting the term policy into a life-cycle policy) can reset the clock and the exclusion period will start again.
Suicide rules may also vary depending on the type of insurance you have:
Group life insurance
Unlike most individual life insurance policies, many group life insurance policies (the kind of life insurance policies people usually get through their employers) do not have a suicide clause. If the insured person dies as a result of suicide, the beneficiary will usually receive a death benefit.
Term life insurance
With personal term life insurance, the beneficiary can claim a death pension after the death exclusion period ends. If the person dies one to two years after the policy takes effect, the beneficiary is entitled to all benefits. But, if the person dies during the exclusion period, the beneficiary may only receive the sum of the premiums paid so far.
With a whole life policy, even if the insured dies during the exclusion period, the beneficiary may receive the cash value of the plan. Once the exclusion period is over, the beneficiary will receive the full death benefit and cash value.
How does an insurance company know that someone has died by suicide?
When the policyholder dies and the beneficiary files a claim, the insurance company will must a death certificate. The death certificate will describe the cause of death and state whether the person’s death was self-harm.
If the death certificate is inconclusive or includes a suspicious cause of death, the insurance company may request other documents, such as an autopsy report, a physical examination report, an EMS report, or the person's medical history.
Since suicide deaths may take longer to investigate, the beneficiary may delay receiving the benefits of the life insurance policy.
Although the claim process may be more complicated and time-consuming, beneficiaries should not use this to prevent them from making a claim. When they try to recover from a tragedy, they may be entitled to benefits that can help them.
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Nice Article
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