- In the majority of cases, a life insurance claim won’t be denied because the insured person died by suicide.
- However, if the suicide occurred early in the policy, the insurance company may not pay.
- Most insurance companies have a suicide clause that prevents payouts after suicidical deaths during what’s called a contestability period—often the first two years.
- After the contestability period, the insurance company will pay the death benefit regardless of cause of death.
Life insurance is something you buy for peace of mind. You pay a premium, and in return you know that if something were to happen to you, your loved ones would receive a financial cushion to help them stay in their home, pay for college, or achieve any other financial goals you had in mind. For most people, it’s money well spent.
But you may wonder: Are there ever any circumstances where a life insurance policy doesn’t pay out after your death? Does the cause of death ever matter?
“Sometimes people are concerned about the life insurance company upholding their end of the bargain,” says Mark Willis, a Certified Financial Planner and host of “Not Your Average Financial Podcast.”. “Especially if they're looking at committing to years and years of paying life insurance premiums.”
The good news is that in the majority of cases life insurance policies pay out as long as the policy is in good standing (meaning the premiums are paid up). This is true even if the insured person dies by suicide.
The only situation where things can get tricky is if the insured person passes away during what’s called the contestability period. Here’s what to know about this caveat, as well as other factors that may impact whether you are approved for a policy in the first place.
Inside this article
What is a contestability period?
Life insurance policies have a contestability clause, which establishes a contestability period. The contestability period is a relatively short span of time after you take out the policy—typically one or two years, depending on the terms of your policy. If you pass away during the contestability period, the life insurance company has the right to start an investigation.
Typically, the goal of the investigation is to make sure that you were completely honest about your health and other matters when you applied for the policy.
Say you weren’t upfront about your past heart problems, and you die of a heart attack within the two-year contestability period. If the life insurance company investigates and finds your history of heart problems in your medical records, it may refuse to pay your policy’s death benefit.
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The suicide clause
Most insurance policies have a suicide clause that lasts as long as the contestability period. One potential exception is group life insurance coverage through your employer, which may not have that clause, according to Laura Adams, an insurance and financial analyst with BestLifeRates.org.
If the insured person dies by suicide during that initial period, their beneficiaries will not receive the policy’s death benefit. Instead, the insurance company will pay back the amount the insured paid in premiums before their death. If the policy was a whole life policy that had built up a cash value, the beneficiaries may receive a portion of that back, depending on the terms of the policy.
The point of the suicide clause is to prevent people from taking out life insurance policies on themselves in order to help their families financially when they are planning to take their own lives. But, just like the contestability period, the suicide clause no longer applies when this initial time period ends.
“After that two-year contestability, there's no legal recourse for the insurance company to deny your claim, even as a result of suicide,” says Willis. “This is the case whether it is term, whole life insurance, or any other type.”
It’s important to note, however, that both the contestability and suicide periods may start up again if you update your insurance contract, says insurance agent Travis Price. Increasing the death benefit or adding riders, which are optional benefits you can use to augment your coverage, are the kinds of updates that could restart the clock.
Insurance with a history of mental health issues
Most life insurance policies require you to undergo a health exam and fill out a thorough questionnaire before you are approved. If you’ve struggled with or been treated for mental health issues in the past, including a previous suicide attempt, it’s important to disclose that during the application process. If you don’t mention it at the outset and your insurer later discovers it during the medical exam, the company may deny your application.
It may be more difficult to get approved for a life insurance policy after a suicide attempt or if you share that you’ve had suicidal thoughts with a medical professional, says Adams. But that doesn’t mean your mental health issues will disqualify you from getting life insurance.
“Some insurers may consider you a higher risk and charge a higher premium or deny you coverage,” she says. “If you get denied life coverage for a suicide-related reason, shop multiple companies until you find the best provider.”
Where to get help if you or someone you love is in crisis
If you or a loved one is experiencing thoughts of suicide or talking about harming themself, call the National Suicide Prevention Lifeline at 800-273-8255. You can speak to someone 24 hours a day, seven days per week for free, confidential support in your time of need.
The Lifeline also offers resources for friends and family of people in distress, including help specifically for young people, veterans, members of the LGBTQIA+ community and more. You can also reach the Crisis Text Line by messaging HOME to 741741 or on WhatsApp.
If you are the loved one of someone who has recently committed suicide, there are resources out there that can help you deal with your financial situation during this incredibly difficult time. The American Foundation for Suicide Prevention, in partnership with the National Endowment for Financial Education, offers a financial guide to the aftermath of the loss of a loved one by suicide, which includes information about life insurance payouts, working with financial advisors, the probate process and more.