One of the most traumatic and heartbreaking events that can occur in a person’s life is the suicide of a loved one. In addition to the death itself, the aftermath of the loss of a loved one by suicide can be overwhelming. On this list of tasks to tend to is dealing with the deceased individual’s life insurance. A key issue is whether life insurance will pay following a suicidal death. The answer to this question is not simply black or white.

Terms and Conditions of Insurance Policy

Determining whether life insurance will pay following a suicidal death depends on the terms and conditions of the insurance policy itself. An insurance policy is a contract. As is the case with any contract, the language contained in an insurance policy governs the obligation of the parties. In the case of suicidal death, the language of the policy determines if, when, and how benefits will be paid following this type of demise. 

As a general practice, most life insurance policies will not pay in the event of a policyholder’s death by suicide if the demise occurs within two years of the effective date of a policy. Some policies only have a one-year exclusionary period of this nature.

What Happens If a Policyholder Commits Suicide During the Initial Exclusionary Period?

If an insurance policy specifically excludes coverage for a suicide death during the first two years it is in force, the exclusion of coverage is absolute. There simply is no way to work around the exclusion of coverage for a death by suicide within that timeframe. 

Consumers need to always keep an important fact about life insurance companies in mind. Life insurance companies are in business for one primary purpose and that overriding reason alone. They are in business to make money for their shareholders. One way in which insurance companies enhance their bottom lines is to limit the amount of money paid out on claims after the death of a policyholder. In other words, insurance companies will not bend the restrictive exclusions in a policy, assuming they are lawful.

In California, as is the case in all other states, insurance companies are permitted to include exclusionary periods for death by suicide within their policy contracts. Thus, provided there is no illegality associated with a suicidal death exclusionary provision, the restriction will stand and no payment will be made to named beneficiaries.

Refund of Premiums Paid for Life Insurance After a Death by Suicide

There is one bit of a bright spot in regard to a life insurance policy of a person who dies by suicide within the exclusionary period. In a good number of cases, the estate of the deceased person will be able to obtain a refund of premiums paid on the policy. Whilst this will come nowhere near the benefits that would otherwise be paid under the policy, the estate of a person who dies by suicide during the exclusionary period at least is not out the money the individual spent on policy premiums during his or her lifetime.

Denying a Claim on Grounds of Suicide – When There Was No Suicide

Unfortunately, there are situations in which life insurance companies inappropriately and incorrectly classify a policyholder’s death as a suicide when that individual in fact did not die at his or her own hand. This may sound like a shocking situation, even something unimaginable. The stark reality is that there are quite a number of cases in which a life insurance company classifies a death as a suicide to avoid making a claim payment even when the death was not a suicide.

The death of actor Heath Ledger illustrates a situation in which a life insurance company denied a claim based on an inappropriate, incorrect contention that the policyholder died by suicide. In the case of Ledger, he had taken out a $10 million life insurance policy seven months before his death. The policy named his daughter as the beneficiary. 

The New York Medical Examiner determined that the cause of Ledger’s death was acute intoxication by prescription medications. Specifically, the combined effect of three anti-anxiety medications combined with two painkillers and one cold medication resulted in an accidental death – not a suicide.

Despite this official finding by the Medical Examiner, the life insurance company denied the claim based on that corporation’s determination that Ledger killed himself. The insurer refused to pay Ledger’s 3-year old daughter the policy proceeds. The failure to pay benefits resulted in a lawsuit being filed by Ledger’s estate. Ultimately, the lawsuit resulted in Ledger’s daughter getting a percentage of the $10 million benefit, but not the full amount. Again, this occurred even though an official determination was made by the Medical Examiner that Ledger’s death was accidental. 

Suicide Cleanup

Dealing with life insurance is not the only challenge faced by people who lose a loved one to suicide. Another overwhelming matter can be suicide cleanup in many cases. When faced with the need for suicide cleanup after the death of a loved one by their own hand, seeking professional assistance to restore the property is highly recommended. Loved ones should not take on the incomprehensible task of suicide cleanup following the death of a family member or other loved one.