Can your beneficiary collect life-insurance benefits after your suicide?
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Asked July 13, 2010
Under some policies, suicide is an insured event, and the policy will be paid in the event of the insured person's death. This is not always the case, and it is important to review the policy in question to find out what the suicide clause in it may be. Because insurance companies would quickly go bankrupt if a person could take out a large insurance policy and then commit suicide, most companies have an exclusionary clause that refers to how long after the policy is taken out a person must live before suicide is a payable event.
From the common sense standpoint, it is not in the public interest to encourage people to run up high debts and then commit suicide to gain a profit for their heirs. Because of this, some insurance companies refuse to settle claims for suicide at all. Most companies, however, realize that such events are possible, and insist on a 2 year or longer period between taking out the policy and committing suicide. This prevents immediate suicides after getting a policy, and research had indicated that a suicidal person is not likely to wait 2 years before doing themselves in.
As long as a person is rational at the time the policy is taken out, the insurance company understands that mental health, physical disease, and other concerns may develop later in life that make a person become unbearably despondent. Most states limit the waiting period before this clause expires to 2 years, but other states allow up to 5 years before such an event can be claimed against the policy.
Answered July 13, 2010 by Anonymous