You buy life insurance because you are trying to find financial protection for your loved ones. This seemingly simple, selfless gesture is also a little paradoxical in nature. You pay your monthly (or yearly) premiums, have coverage in place and hope your loved ones will never have to use it. And, in the event that time comes, you will not be around whenever your beneficiary files claims.
Every life insurance coverage policyholder wants to know that their loved ones won't have to leap through hoops to receive a life insurance payout. Even in a worst-case scenario, like suicide.
We understand your concerns, and we'll level along with you …With suicide, the payout of a life insurance policy can become uncertain. At Haven Life, it's our mission to get as many people as possible access to affordable life insurance protection. We are not – and do not desire to be – in the industry of not supporting beneficiaries in their time of need.
Here are the considerations a life insurance company (in Haven Life's case, our parent company, MassMutual) will weigh following a suicide.
Is the suicide inside the contestability period?
Every life insurance policy features a contestability period, during which the insurer can “contest” any claims made as well as decline to pay out the death benefit. The contestability period is generally 2 yrs. This can help the life span insurance company guard itself against insurance fraud. For instance, let's say someone doesn't disclose a terminal illness within their application and takes out a $1 million policy knowing they will die well before they've paid a small fraction of that in premiums. That might be an instance in which the insurance company would exercise their to contest the validity of the policy and may not pay the claim.
Why does it apply here? In short, if a policyholder commits suicide throughout the contestability period, most insurers will not pay out the claim. This really is to prevent someone who is having thoughts of suicide from getting a policy. Obviously, it is a tragic situation, with no insurer wants to fall short of expectations. But in these instances, the insurer would refund any premiums paid (to the beneficiaries), and it will be as if the policy had not been removed.
Are there any exceptions?
No. If the insurer bakes an exception, then suddenly the insurer becomes responsible for deciding which situations warrant the best – and which of them do not.
How does some insurance company verify that someone committed suicide?
When a beneficiary files a claim, life insurance companies require a death certificate before you spend money the benefit. A death certificate will indicate if the deceased committed suicide, or maybe they died in an accident where suicide is really a possibility (for example, a medication overdose), in which case the insurer might choose to investigate further.
What if an individual commits suicide following the contestability period?
Policies will vary by insurer, so we can't talk to each one specifically. For Haven Term policyholders, whereby coverage is disseminated by our parent company MassMutual, few claims are denied following the two-year contestability period. (MassMutual paid over $5 billion in insurance and annuity benefits in 2021 alone.)
Claims will always be reviewed on the case-by-case basis, but generally, at this point, death by suicide is covered and eligible for a death benefit payment.
If you've purchased life insurance, you have in all probability family members that you wish to financially protect in the event something would take place. Please don't leave that up to chance and contracts.