When does life insurance cover suicide?

In cases of death, the presence of a life insurance policy can provide much-needed financial assistance for those left behind. But if the death wasn’t from natural causes, the payout of a death benefit isn’t straightforward — particularly if the person committed suicide.

“If the claim is denied because of suicide, the beneficiary is typically owed a return of the premiums that the policyholder paid for the insurance,” wrote NerdWallet contributor Barbara Marquand. “How a life insurance policy will handle suicide depends in part on the type of coverage — individual versus employer-paid group life insurance.”

While individual life insurance policies provide coverage for suicide, virtually all of them contain a clause denying payment in case the person died from suicide during a certain period after a policy becomes effective. According to Paul Graham, senior vice president of insurance regulation and chief actuary of the American Council of Life Insurers, most policies have a period of two years, though some US states may require just a one-year window.

“This is generally seen by the industry and regulators as sufficient time to prevent policies from being purchased by someone who intends to commit suicide,” he said. Deaths from suicide that occur after that window would warrant a payout just as illness or other insured causes would.

For suicides that occur within the excluded period, insurers will generally give the policy beneficiary an amount equal to premiums paid for the policy minus any premiums still owed before death. For whole-life or other permanent policies, Graham said, any outstanding loans against the policy’s cash value would also be subtracted.

Group life insurance that’s paid for by an employer typically has no suicide clause, which means a loved one with this kind of coverage who took their own life should receive a benefit. In such a case, it’s best for the bereaved to contact the employer’s human resources department and ask how to file a claim.

“Group life insurance that employees purchase treats suicide much the way individual policies do, excluding it during the first one or two years,” Marquand wrote. “If the death occurred during the excluded period, the premiums the employee paid for the coverage would typically be returned to the beneficiary.”