SUICIDE UNDER LIFE INSURANCE.

For family members in general, two policy clauses can come into play when someone they love
dies by his or her own hand. If either clause is invoked by the insurance company, the insured
persons family would receive no death benefit, though they would get back the premiums paid
for the policy.

The suicide clause. Usually, this clause states that no death benefit will be paid if the insured
commits suicide within two years of taking out a policy.

Whenever an insured person replaces an existing life insurance policy with a new one, the time
clock for the suicide clause is set back to zero and starts over again.

Professor Joseph Belth, formerly the publisher of The Insurance Forum, wrote about a case in the
1970s in which an Iowa man replaced four small policies with one policy that had a death
benefit of about $60,000. Both the old policies and the new one were issued by Bankers Life Co.

The man committed suicide within two years of the issuance of the new policy. The insurer
denied the claim under the suicide clause. A lawsuit followed. Four years later, on the eve of
trial, the widow settled for $23,000, and also had to pay substantial legal costs.

* The incontestability clause. This clause says that if the insured person made misstatements
on the policy application, and dies within two years, the company can decline to pay the death
claim. After that, the policy is incontestable except in cases of outright fraud.

Just as with the suicide clause, the clock on the incontestability clause is reset whenever someone
replaces his or her existing policy with a new one.

Families may have to fight

There are plenty of examples where family members had to go to court to collect insurance
benefits. Heath Ledger, who played the Joker in the movie The Dark Knight, died in early 2008,
just seven months after he took out a $10 million life insurance policy. The New York Medical
Examiners office ruled that the death was an accident, resulting from the abuse of prescribed
medications. This raised two questions. Was the death a suicide? And did Ledger have a drug
habit that wasnt disclosed on his policy application?
The insurer, ReliaStar Life Insurance Co., launched an investigation into these questions, rather
than paying the death claim immediately. In response, lawyers for Ledgers young daughter
Matilda filed a lawsuit. The case was settled for an undisclosed amount that was less than the full
$10 million.

In a less prominent case, Todd Pierce of Montana, who had been fighting cancer for several
years, died in a car crash in 2009. The sheriffs department called it accidental death, and
Pierces family filed a claim for $224,000 under an accidental death policy he had received
through work.

The insurer, Metropolitan Life, denied the claim on the grounds that Pierce had committed
suicide. Jane Pierce, Todds widow, sued the following year and the claim was eventually paid.

The Truth About Suicide & Life Insurance

It doesnt matter how old you are, what your financial situation is, or the status of your health.
Suicide and its contributing factors can affect anyone, and for those left behind, its something
that can never be fully understood.

Unfortunately, it is a reality for some. Suicide is the cause of death for nearly 30K people each
year in the U.S., and many of them have life insurance policies. The number one question
regarding suicide and life insurance is if policy beneficiaries would receive any benefits if the
policyholder takes their own life. After suffering the loss of a loved one, times can seem even
tougher if a life insurance claim is denied. However, take heart if youve found yourself in this
situation, because theres a big misconception about suicide and life insurance.

The Myth and the Truth

From religion to law, suicide has lent itself to many official and unofficial rules, myths, and
cautionary tales. Its not surprising that insurance made its way into the mix, and many people
incorrectly believe that if you commit suicide, your life insurance will refuse to pay out
bottom line.

In actuality, thats not always the case. The answer is actually in an individual life insurance
policy. Many life insurance policies, just like any other insurance coverage, come with certain
exclusions that null and void any benefits should you expire in a certain way, i.e., suicide.
However, there can be fine print attached to that exclusion. Some policies will pay benefits even
if the policyholder committed suicide, but the policyholder would have had to committed suicide
after holding the life insurance policy for two to three years depending on the carrier.

Obviously, this kind of fine print is built into insurance policies to prevent people from buying
the best life insurance possible and then killing themselves the moment the ink dries and the
premium payment clears. Movies have turned such unfortunate scenarios into bittersweet tales of
desperate parents (or spouses, etc.) buying life insurance and then committing suicide in order
for their children (or others) to receive policy benefits. However, unless one committed suicide
within the first two years of their policy, the insurance company will likely return the premiums
paid, but no added benefits would go to loved ones. No matter what, in such scenarios, any
family members left behind should consult the insurance company if the policyholder has
committed suicide. Its probably going to be the furthest thing from your mind if a loved one is
no longer here, but dont wait to file a claim, particularly if theres a child involved as a
beneficiary.

Denial of Benefits Due to Mental Illness

Overall, getting a life insurance payout is extremely successful. According to the American
Council of Life Insurers (ACLI), 99% of all life insurance claims are paid in full, contrary to
popular belief that insurers constantly look for reasons to deny them, but you must be paid up
premium-wise in full to receive benefits, regardless of how you die.

And what about the claims that arent paid? Well, we already know if someone commits suicide
before a policys exclusion limitation, its possible the beneficiaries wont receive benefits. What
about after that two or three year period thats found in most policies? Sadly, its possible
beneficiaries may still be denied payment. This is actually very common in such scenarios.

Some policies come with a separate exclusion that addresses non-disclosure of mental health
and/or drug or alcohol addiction/dependencies. To receive life insurance, many companies
require you to take several health tests and submit them, but sometimes, tests are completely
optional. Mental illnesses are also taken on a case-by-case basis. If you have a history of serious
depression and your life insurance carrier doesnt know, you run the risk of eliminating any
benefits if you commit suicide. Leaving out information like this allows insurance companies to
deny benefits based on a contestability clause.

If you have a mental illness or addiction, its not as easy as checking the non-smoker box.
Unfortunately, if you disclose your mental illness or addiction, even if you manage it through
medications and therapy and/or have been sober for a significant period of time, your eligibility
for life insurance may be hurt. At that point, you could try getting life insurance through an
employer or trade union, but the benefits are going to be smaller. If youre diagnosed with a
mental illness after youve bought your life insurance policy, you will still be covered, and the
insurance company is not allowed to raise your rates based on Guarantee of Insurability.

When Insurers Dont Want to Pay

Even if your life insurance policy is paid up and you know it front to back, your loved ones may
still be denied benefits. In some recent cases, on the grounds of suicide even if it wasnt
suicide.

In March 2011, a Montana widow, Jane Pierce, shared her own personal story about just that. Her
husbands life insurance company accused her husband, Todd, of committing suicide. Todd had
been fighting cancer for several years when he was in a freak car accident that took his life at age
46. Although his death was determined to be an accident, MetLife, Todds life insurance
company, told Jane he had committed suicide, and his claim was denied. They claimed he had
taken a lethal amount of painkillers, despite the fact that the medical examiner explained that the
high levels of the drug on his toxicology report were from the medical treatment he received
after the accident. Jane eventually sued to get the $224K in policy money, but the insurance
company still denied any wrongdoing on their part and didnt pay interest on the money theyd
held during the dispute.

One of the most recent, famous cases of a denied life insurance claim involving suicide
speculation, accidental death, and denied claims, was the death of actor Heath Ledger in January
2008. According to the New York Medical Examiner, Ledgers official cause of death was acute
intoxication of prescription medications. The combined effects of two painkillers, three anti-
anxiety/sleeping medications, and a cold medication resulted in his accidental death. That didnt
stop his life insurer from refusing to pay a $10 million policy though. Ledger bought the policy
only seven months before his death, naming his three-year-old daughter, Matilda, beneficiary.
The insurer first denied it on the grounds of his policys two-year contestability period, citing the
suspicious cause of death warranted an investigation, and possibly claim denial because it may
have been suicide. When it was no longer ruled a suicide, it still took a lengthy lawsuit from
Ledgers estate to get Matilda an undisclosed percentage of the $10 million, held in a trust until
shes 18.

While many life insurance claims are paid out, denied claims and other hang-ups can result in a
long, hard road to payment. The previously mentioned contestability clause and other loopholes
often result in benefit payments being delayed. Although 99% of policies are paid out in full, its
not clear how many of those payments were withheld for any amount of time past when they
should have been paid out (by reasonable standards), initially denied, or that were only paid
out after a lawsuit against the insurer. According to the most recent data, from 2009, from the
ACLI regarding the amount of contested life insurance payouts, insurers in the U.S. were
disputing approximately $1.3 billion in life insurance claims. That amount includes $396 million
in denied claims from 2009. At the same point in time, insurers had paid out a collective $59
billion in claims.

Unfortunately, while Jane Pierce and Ledgers estate sued, many dont. If someone is absolutely
wronged by the insurer and/or mistakenly denied a claim, they may not know how to take
appropriate action, have the funds to do so, or know that theyve even been wronged. Hopefully
none of us would ever have to go through such an ordeal, but if you ever have to make a life
insurance claim and are denied on such grounds, dont rely on the insurance company to let you
know when theyve incorrectly done so and always seek an expert opinion.

Receiving Benefits

The issue of suicide is a serious, and life insurance is usually the last thing on most peoples
minds if theyve reached such an unfortunate state of mind. However, due to the fact that suicide
is often a rash, spontaneous, and impulsive decision, there have always been and always will be
situations where policies are in place either long before the unfortunate passing or at least
purchased in the fairly recent past.

Regardless of how you pass, insurance companies may try to wrongfully deny death benefits to
the people you love and want to support after death. Even when youre aware of all policy
exclusions, your beneficiary should know the ins and outs of the policy as well. You need
someone fighting for you after youre gone, sadly to possibly fight for what you wanted for
them.

If you or a loved one is depressed and considering suicide, seek help through local resources and
national foundations like the CDC Suicide Prevention center. If you or someone you love is
possibly abusing alcohol or drugs, seek help through a trusted source like the National Council
on Alcoholism and Drug Dependence. The Substance Abuse and Mental Health Services
Administration is a great resource for both also, currently leading the country through April as
National Recovery Month.

Maam there was no such information available on suicide covered under short term
insurance but there was a question raised by someone on a website regarding the same the
answer for that was same as suicide covered under life insurance.