Does life insurance cover suicide? Explaining common life insurance exclusions.
First and foremost, if you are struggling with you mental health or are overwhelmed, please contact Lifeline (13 11 14) or Beyond Blue (1300 22 46 36)
When writing about life insurance, some articles are certainly easier to write than others.
This is not one of them.
And yet the question of suicide, self-harm and life insurance is one of the most common questions we are asked.
It is of course a sensitive area, though it’s important that anyone with life insurance knows the terms, inclusions and exclusion of their policy; something that far too many Australians are not across.
To answer the question of suicide and life insurance, we need to step back and discuss what are known in the industry as general exclusions and specific exclusions.
Important to note that we will be explaining things generally and each insurer and policy can vary, though there are definitely commonalities.
What are general exclusions?
General exclusions are exclusions insurers will typically have regardless of life insurance plan and policy. These general exclusions are included in policies irrespective of the policy owner’s medical situation, lifestyle or circumstances.
Suicide (Self-harm)
Almost all life insurance policies will have a suicide (or self-harm) that denies benefits (payment) in claims involving suicide (or attempted suicide) in the first 13 months of the policy with some insurers extending this peiod to up to 24 months.
Once the defined period has passed, the clause is waived (or opened for re-assessment, depending on the policy of the insurer).
During the period of exclusion, some insurers agree to refund any paid premiums in lieu of death benefits.
The purpose of the 13 - 24 month exclusion is to prevent policy owners from taking out life insurance with the intention of self-harming for the sole purpose of benefits being received by their family.
It is important to note that when applying for life insurance, many insurers will ask for any history of attempted suicide and policies might not be offered depending on the history of the applicant.
Criminal conduct
If death (or injusry) is directly occasioned through criminal activity, insurers have a general exclusion not to pay death benefits.
Recklessness and negligence
Insurers have a general exclusion for recklessness and personal negligence, though this extent of this exclusions does come down to each insurer and policy.
The recklessness and negligence exclusion typically activities, accidents and incidents that a reasonable person would otherwise not do in general circumstances.
Interestingly, this has included for accidental death whilst taking a selfie in a dangerous situation.
What are specific exclusions?
Specific exclusions are exclusions an insurer will put into place based on the particular circumstances of the applicant including medical situation and hisory, lifestyle and other important factors that could affect the risk level of the application.
Specific exclusions therefore vary from applicant to applicant.
Pre-existing conditions
Depending on the insurer and any existing or recurring medical conditions, illnesses or diseases, specific exclusions may be part of the policy for these pre-existing conditions.
Dangerous jobs
Insurers may include specific exclusions or limitations for applicants that have risky occupations such as working underground, farming and construction.
Occupational hazzards
Similarly, insurers may have specific exclusions or limitations for those at risk of occupational hazards such as vehicle accidents for truck drivers or drowning for a fisherman.
Risky hobbies
Applicants that participate in risky hobbies such as sky diving or mountain climbing are subject to specific exclusions in their policies.
Conclusion
Suicide can be covered under life insurance after a 13 - 24 month waiting period, though this can vary from insurer to insurer and policy to policy.
Understand the general and specific exclusions as part of any life insurance policy you are considering to ensure it is suitable for your needs.
