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Saturday, September 23, 2023

Life Insurance: Suicide Clause

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Our emotional, psychological, and social well-being are all part of our mental health. It has an impact on the way we think, feel, and act. It also influences how we deal with stress, interact with others, and make good decisions. Mental health is crucial at all stages of life, from childhood to maturity. According to the World Health Organization in a year, over 700,000 people take their own lives and attempt suicide. This not only affects the society that we belong to. It mostly affects the families of the diseased person. Living long-term effects on the entire community and the people left behind. 

In the event that a person died of suicide is insured with life insurance. Here are the policies and terms that people should understand and know:

The life insurance suicide clause is a condition that applies to term and permanent life insurance plans for the first two years. When a policyholder dies, the death benefit is usually provided to their beneficiaries in a lump payment that is tax-free. The suicide clause stipulates that the insurer will refuse to pay if the death is caused by self-inflicted injury within the first two years of the policy’s existence.This rule precludes an applicant from purchasing a life insurance policy and then killing themselves. Beneficiaries receive a return of any premiums paid, as well as maybe some monetary value from a permanent insurance policy, in lieu of the death benefit.

Suicide provisions can also modify as stated to the type of coverage you have such as Term Life Insurance, Wholelife Insurance, and Group Life Insurance. 

Term Life Insurance is a type of life insurance that allows beneficiaries of individual term life insurance to collect the death benefit as long as the exclusion period has passed. The beneficiaries are entitled to the full benefit if the policyholder dies after the policy has been in existence for one to two years. However, if the person dies during the exclusion period, the beneficiaries may only receive the number of premiums paid up to that point.

Group Life Insurance is different from most individual life insurance plans, a lot of group life insurance policies (the kind that people commonly acquire through their companies) do not have a suicide clause. If an insured person commits suicide, their beneficiaries are usually entitled to the death benefit.

Whole Life Insurance gives permanent death benefit coverage for the life of the insured. Even if the covered individual dies during the exclusion period, the beneficiaries of whole life plans may receive the plan’s cash value. When the exclusion period expires, the beneficiaries are eligible to receive the entire death benefit as well as the cash value.

How can an insurance company tell if a person committed suicide?

The insurance company will demand a death certificate when a policyholder dies and their beneficiaries submit a claim. The cause of death will be listed on the death certificate, as well as the death is self-inflicted. The insurance company may plead for additional evidence, such as an autopsy report, a medical examiner report, an EMS report, or the person’s medical records if the death certificate is inconclusive or includes a disputed cause of death.

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