Will Suicide Cancel a Life Insurance Policy?

Losing someone to suicide evokes a number of painful emotions.

At the end of the day, money becomes an issue, especially if life insurance is involved.

Since there is a suicide clause in the majority of life insurance policies stating that they will only pay out for a suicide death following a certain number of years of the policy being active, the question of was it a suicide or not becomes even more important. Even then, they may only be required to pay out the amount of premiums paid by the deceased, as opposed to the full lump sum that was specified due to other causes of death.

If the deceased moves forward and sets up the death to look like something other than a suicide (perhaps a murder), they will be satisfied in knowing that their beneficiaries will still obtain a payout. This, though, is where investigative work takes over in order to prove the case otherwise. Life insurance companies will investigate the death to see if it in fact was a suicide prior to releasing money.

In order to determine if the deceased would have had a motive for the suicide, investigators will look at a number of factors, including at what juncture the policy was taken out. Should the person have been "murdered' only a few months after having taken out the policy, red flags could go up. If an insurer determines the person did in fact commit suicide, they will not offer a payout to the beneficiaries.

Most life insurers have a suicide clause in place in that they do not want to lose money in cases where people take their own lives, yet want their families to obtain the financial benefit.

In most cases, suicidal death will only be covered after the policy has been in place for two years or more.

Another case that draws suspicion is when a parent runs into financial problems, is unable to care for their kids, and then possibly turns to suicide. If that's the case, the parent would be hoping that their passing would allow the life insurance policy to kick in in order to help their family.

What will actually happen is that the life insurer will investigate the case and see if there are any red flags leading up to the person's death. Questions will be impressed upon family members, co-workers and any others who might have known the deceased.

Most people will pursue a life insurance policy in good faith, but there will always be some who look to skirt the system.

For some of them, it is a matter of life or death.