A loved one’s suicide can be one of the most painful situations to face. With all the questions and uncertainties that come with such a terrible loss, the last thing you need is to worry about the future because of a denied life insurance claim. Unfortunately, there are a number of factors that affect how a life insurance policy will pay out in the case of a suicide.
The truth is that an insurance company may reject a life insurance claim in the event of a suicide based on two particular clauses: The Suicide Provision and the Incontestability Clause.
The Incontestability Clause
The Incontestability Clause allows an insurance provider to deny a claim during the first two years of life insurance coverage. The purpose of this, of course, is to deter people from purchasing a life insurance policy before a planned death in order to leave a large sum of money to their beneficiary.
If the individual dies within the first two years, the insurance provider may investigate the claim and deny payout if the cause of death is determined to be suicide. Suicide is not the only reason an insurer can deny a claim under this clause, however. A claim may be rejected if the death occurred during an illegal act, for example. However, once those two years are up, the life insurance claim becomes “incontestable,” with the exception of serious criminal offenses like fraud.
The Suicide Provision
A life insurance policy may also include an additional provision that regulates the terms and conditions of the payout. In other words, a policy may state that no death benefit will be paid if the insured individual commits suicide.
If a life insurance policy does not include any active clause related to suicide at the time of death, then the beneficiary can still receive the payout in many cases. After all, it would only be fair that family members receive their financial benefits after any kind of unforeseen loss.
Life insurance policies can be obtained at virtually any benefit increment, from as little as $10,000 to payouts in the millions. For more information about life insurance policies, contact Bankers Fidelity today.
