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Is life insurance paid out after suicide?

Although several families might think that a life insurance policy won't pay out after a suicide, that is a misconception, as there is a suicide clause built into most policies.

Suicide Clause

The clause reads that if you commit suicide within a designated time--usually, it states two years--the policy will not pay out. However, if you commit suicide after the initial two years of the policy, the insurance company must pay the claim.

Proving Suicide

According to Round Table Insurance, some insurers will pay the claim if they cannot prove there was intent to harm oneself when signing up for the policy. They might at least refund the premiums if the suicide occurred within the first two years.

Insurance and Mortgages

Legal and General, a life insurance company in the United Kingdom, stated that although it does not pay out on suicides in the first year of a policy, it will send payments directly to a mortgage lender if the insured took out the policy to help pay for his mortgage.

Assisted Suicides

Although in 25 states there have been attempts to legalise physician-assisted suicide, that effort has been successful only in Oregon. Oregon's law states that physician-assisted suicide should not hinder the payouts of life or accident insurance. However, Oregon insurance companies feel that terminally ill clients are lying and committing fraud.

Military Insurance

Active military personnel and the reserves hold their own Servicemembers' Group Life Insurance. It covers all types of death unless the member was found guilty of treason or dishonourable behaviour. Military personnel receive full burial honours, and their families receive their death pensions and their life insurance payouts, even in the case of suicide.