Does life insurance cover suicidal death?

Life insurance covers death due to suicide as long as certain requirements are met. The death must happen after the suicide clause time period(contestability period) if one is listed on the policy, and there must be no evidence that the insured misrepresented their mental health on the original application.

There are only a few situations where the payout from a life insurance policy will be denied, and they are usually due to fraud on the application, non-payment of premiums or a contestability period.

What is a suicide clause?

A suicide clause is wording in the policy that requires it to be in force for a certain number of years before the company will pay a claim on a suicidal death. It’s a fairly common clause, and the time period is usually two or three years. It’s often also referred to as the contestability period because the insurance company can contest the payout if death happens during that time.

The purpose of a suicide clause is to prevent someone who intends to die by suicide from purchasing life insurance just before they follow through.

Life insurance companies depend on premiums paid over the years to provide funds for paying claims. An applicant’s life expectancy is one of the biggest considerations in the calculation of premiums and even in the decision to issue a policy at all. When an insured dies shortly after taking out a policy, the insurance company wants to make sure it was, in fact, an unexpected death.

Why do you have to tell the insurance company about a mental illness?

Like any other condition, a mental illness diagnosis is part of the overall health screening a life insurance company will do when considering an application.

As mentioned above, anything that affects life expectancy is of interest to an insurance company. If you have a diagnosis that increases the risk of early death, it will likely result in higher life insurance rates or even a denied application.

Certain mental illnesses are associated with a greater risk of suicide and must be disclosed when you apply for life insurance. If the applicant fails to disclose a diagnosis, it can be considered fraud and void the policy. In that case, the beneficiary will not receive the death benefit.

If your mental illness is well controlled and treated properly, odds are good it will not have a major impact on your life insurance application. It’s always best to be honest when you apply.