It is a common myth that no life insurance providers will payout in the event of suicide. However, many policies (DeadHappy included) have a specific suicide clause.
This means we will not payout in the event of suicide if it occurs in the first twelve months of a policy. This is mainly because there’s a chance that some people planning on taking their own lives may take out a life policy with a large payout beforehand.
While we cannot condone this action, we understand why people might resort to it – everyone wants to help out their loved ones when they die. It’s awful that people may turn to this in desperation, but unfortunately life insurance providers need to ensure they’re covering themselves too. The length of a suicide clause can vary, but it’s usually a maximum of two years.
While some policies may not have a distinct suicide clause, most will certainly have a contestability clause. This clause means there’s a certain length of time in which insurers can investigate the circumstances of a person’s death. If you die under dubious circumstances whilst the clause is in effect, the insurer could suspect suicide and not pay out.
There are just a few more facts to know about the contestability clause. Firstly, it resets if you switch to a new policy. So hang in there if you’ve changed policies. Secondly, while your beneficiaries may not receive that big payout, they may end up getting back the total amount of premiums paid. Breaking even may not be a silver lining, but it’s something.