Right up there with root canals and tax audits, life insurance and suicide probably tops anyone’s list of least favorite subjects to talk about. That’s probably why the relationship between life insurance and suicide is so widely misunderstood.
It’s a common misperception that a life insurance company won’t pay on a policy if the insured took their own life, yet the only time this is true is if the suicide takes place within two years of obtaining a policy. Another misperception is that life insurance can’t be obtained after a suicide attempt.
Each life insurance policy has a two-year “contestability clause” that gives the company the right to refuse payment on a suicide or in cases where the insured withheld information, such as a serious illness or a hazardous occupation.
“People have a great fear of having a policy where the death claim is not going to be paid or there’s a perception out there that they can’t trust the insurance company and the reality is that nearly 100 percent of all death claims are paid,” said Ryan Pinney, Vice President of Brokerage Services at Pinney Insurance Center, Inc. in Roseville, Calif. “The very rare exceptions are when there has been purposeful malfeasance or fraud perpetrated on the company and usually only during the two-year contestability period.”
He says there have even been cases where a company did pay after a suicide, within the two-year contestability period, after it was proven that the policyholder wasn’t suicidal at the time the policy was written and therefore the act wasn’t premeditated.
Obtaining life insurance after a suicide attempt is possible, but companies will want a waiting period of a few years after someone had talked of suicide (suicidal ideation) or made an actual attempt, along with proof of treatment. Basically, an insurer will want some level of assurance that the problem has been mitigated.
“An underwriter will want to examine someone’s entire medical history, the circumstances surrounding an attempt and when it took place,” said Shelby Hollister, Vice President of Life Insurance Underwriting at Genworth Financial.
“We would also review the individual’s current physical state and state of mind, reviewing underlying psychological conditions, the number of attempts, and diagnosis,” said Hollister. “From there, we may decide to grant insurance, require a higher premium, delay or– worst case scenario– deny coverage. Each individual case is different and carefully reviewed.”
Companies will also view talk of a suicide differently than an actual attempt. A company offering coverage after an attempt would require a much higher premium. In some cases, an applicant might be denied or told to reapply in a few years. A suicide attempt would also require a higher premium than someone who had only talked about it.
Hollister says the decision to cover or deny insurance coverage is made on a patient-by-patient basis. Several factors may be taken into consideration, such as the amount of time since the last attempt and the outcome of the prognosis. Other factors, according to Hollister, might include the type of medication prescribed and the reason behind the suicidal thoughts and if it has happened again since.
Often, the person may have just been going through a rough patch and thoughts of suicide were tied to a specific event.
“That’s a completely different situation than someone who has suicidal thoughts on an ongoing or regular basis,” said Hollister. “Depending on the disorder we may not offer coverage for a few years.”
If a patient has talked of suicide with their doctor, that information would be noted in their medical records and will be something a provider would take a closer look at. Pinney says the life insurance company will also want a waiting period of anywhere from one to three years after someone talks about suicide or even longer if there’s been an actual attempt.
“Three years if it’s a formal attempt and typically more like five, and if it’s suicidal thoughts then a lot of times it’s once treatment has been completed or once you’re on an antidepressant or lifestyle factors have changed to be significant enough to make a difference,” said Pinney. “What they would want to see is that a considerable amount of time had passed from an attempt or a discussion about it and that treatment also took place. For example, that they’re now on antidepressant drugs or they’ve been through counseling or both.”
If you or someone you know is talking about committing suicide, call the National Suicide Hotline at 1-800-784-2433 (1-800-SUICIDE) or 1-800-273-8255 (1-800-TALK).