Life Insurance and Suicide

There’s a famous scene in the holiday classic “It’s a Wonderful Life”, where George Bailey finds himself begging greedy old Mr. Potter for money after finding himself in a tough spot. Mr. Potter asks Bailey if he has anything of value to secure a loan. George mentions an old life insurance policy, to which Mr. Potter responds, “George, you’re worth more dead than alive.”

Throughout the bulk of the movie, George learns lessons of his true value and the film has a heartwarming ending. This is not always the case in real life.

According to the American Foundation for Suicide Prevention, suicide is the 10^th leading cause of death of Americans and in 2018, it resulted in the death of over 48,000 people. Almost 1.5 million people attempt suicide annually and it costs the country $69 billion in self-injury-related costs.

It can be a difficult topic to discuss. It can cause many to wonder what is the relationship between suicide and life insurance and does a life insurance policy pay benefits when a suicide take place?

Life insurance policies generally have a suicide clause which deals with the subject. The clause is in place to discourage people from hurting themselves to provide potential gain for their families. This provision will prevent payments for at least a year after issuance if a suicide takes place. In many instances, there is a two-year clause.

Should a suicide take place within this incontestability period, many companies limit their obligation to returning any premiums that were paid on the policy. The death benefit would not be paid.

The death of any loved one can be devastating. It can be particularly so when it involves a suicide. Life insurance, however, was never intended to serve as a reason or justification for taking one’s life. These provisions are in place to stem that incentive.

If you are aware of a situation that could possibly lead to a suicide, contact the National Suicide Prevention Lifeline at 1-800-273-8255.

If you have questions about life insurance and its benefits and limitations, you are encouraged to contact us. Our independent agents are knowledgeable and professional and will be pleased to answer your questions. Should you desire a quote, they can check with multiple companies to find your best value. Connect with us today.