I’ve often been told that life insurance has an out with people with severe depression or severe bipolar disorder because they’ve got that suicide clause thing. I’ve written about this before and I think life insurance companies would probably prefer I leave it alone, but it’s a subject that needs clarification.

In virtually every traditional life insurance policy in our country there is a two year suicide clause. Simply put, for the first two years of the policy the company does not have to pay a death benefit it death is due to suicide.

The language from one of my own policies states, “The benefits payable are limited if the insured commits suicide, while sane or insane, within two years from the issue date. In such case, out liability will be limited to a refund of the premiums paid to us”.

This is important. I was reading the other day about a dramatic increase in suicide rates during the great depression and an already increasing rate around the world because of our current recession. I am certainly not advocating suicide, but the family left behind needs to know that just because it was suicide doesn’t mean they won’t get the life insurance due to them.

I suspect whether due to ignorance about the suicide clause and what it really says, or out of a misplaced sense of shame, plenty of legitimate claims are never filed. The company isn’t going to track you down. In fact from their end it will probably just appear as though a policy lapsed. Even if the policy lapses, if it was in force at the time of death it is a legitimate claim.

The suicide clause lasts for two years because that’s the law. Regulators didn’t want to see a situation where someone had paid into a policy for a long time, or even more than two years, and had a catastrophic life event that ended in suicide and leave the family penniless.

Bottom line. I hope this helps even one person to file a legitimate claim that would have otherwise gone unpaid.

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