Does life insurance cover suicide?

When it comes to purchasing life insurance, the last thing that most people think about is whether the policy will payout. And when it comes to someone dying by suicide or taking their own life, there is rarely even a discussion or consideration when discussing your future needs. Yet, it is one of the clauses you should know about when you’re purchasing your life insurance policy and here is why:

When purchasing life insurance, the suicide clause is often mentioned and not explained due to the sensitive nature of the topic. The suicide clause generally covers two years from the start of the policy; that time must pass before any payments for self-harm death claims are approved. What that means is, if an insured person were to take their own life for any reason within the first two years of the policy coming into effect, the insurance company would not pay the claim.

Most people don't understand the differences between when a policy is fully medically underwritten before or after a claim. For example, a type of policy usually underwritten after a claim would be group policies such as mortgage and employee group benefit policies. Generally, these types of policies ask a small number of "yes" or "no" questions in advance. These questions will determine whether you qualify on the spot or whether you'll have to speak to an insurance advisor. It is not uncommon for people to answer these questions without much thought to what they are attesting.

When asked questions like “have you been treated in the last 5 years for major depression, bipolar disorder, schizophrenia, or any mental or nervous disorder? Each person may have their own interpretation of what “major” or “disorder” means. For example, treatment for Post Partum depression or anxiety may not be considered a major disorder to some. At the same time, it may be impactful to the insurance company in the case of suicide after two years.

The last highly debated issue for people to consider when looking at taking out a life insurance policy is personal beliefs around physician-assisted suicide or Death With Dignity. Regardless of opinions, wishes or circumstances, most insurance companies and policies do not pay out whether it was deemed doctor-assisted or not. If the assisted death took place within the first two years, it would typically fall under the suicide clause unless otherwise stated in the policy.

The idea of somebody taking their own life is not something that we want to consider at any time in life. But even so, when purchasing life insurance, you must do your due diligence and understand the type of policy and clauses that may affect a future claim to protect yourself and your family.