Life doesn’t always come out the way we hoped for, and if our loved one takes his or hers own life, there will be unfortunately many more things that should be dealt with except the great pain, depression, anger, sadness, and confusion. There are many financial and legal things that family has to go through if there is a case of a suicide, especially if the person who took their own life was the owner of the life insurance policy. Many people are wondering does life insurance cover suicide. This is a good question because there are few things that should be cleared when it comes to life insurance and suicide.
Does life insurance cover suicide and what is there that we could do in this situation?
The answer is simple; life insurance does not cover suicide, but there are chances to try. If it comes to that, there is a big chance that death benefit will be denied. This mainly happens because the insurance company has the legal right to deny paying out the death benefit to loved ones in case of a suicide. However, there are some cases where the family could still get the money from life insurance.
If the person commits suicide after first two years of the policy, there is a chance that death benefit will be paid out to the family of the policyholder. Why is that?
When it comes to life insurance that covers suicide, we said it is not possible. However, if the first two years of a policy have passed, there might be a chance to get a certain amount of money, if not all. This happens mainly because of a suicide clause that comes with almost every life insurance policy. This clause means exactly what was mentioned, if suicide is committed within two years, the legal right of the insurer is to deny paying out the death benefit.
The period of contestability is actually a kind of a protection for the life insurance company, firstly against the people who take out a great amount of life insurance, and after that, they commit a suicide. Even if this sounds bizarre, in the past there were a lot of cases of suicide in order to leave the money to somebody. However, nowadays these things happen rarely, at least after the two years suicide limitations.
When can death benefit be denied?
There are many cases when death benefit will not be paid out to the family of the policy owner. One of them is suicide clause that was mentioned. However, there are more situations in which your policy will be invalid. The incontestability clause means that if the owner of the policy was not telling the truth on the life insurance application or some important information was held back after the truth was revealed your policy will be canceled.
Therefore, the real answer to the question does life insurance cover suicide, is that it depends on the case. One thing is sure, holding back important information will not help you get the cover you need, no matter when, how or if something should happen to you.