Life insurance claim for Suicide – Is it covered under a life insurance policy or not?
Life insurance is an instrumental product to be included in everyone’s financial planning. It provides financial coverage to the insured person’s family in case of his or her demise during the policy tenure. But not all kinds of deaths are covered by the insurance companies. Such as in case of the insured’s death due to suicide, the insurer might or might not provide the insurance coverage to the policyholder’s family depending on specific terms and conditions.
A person can commit suicide due to various reasons, perhaps because of a personal problem, professional stress, debt pressure or any other issue. In any situation, the deceased family comes under immense financial burden, if he or she has any outstanding liabilities or responsibilities to take care. In such a scenario, life insurance steps in to help the family of the deceased insured person to survive. The life insurance claim secures the distressed family by providing financial assistance to them, subject to specific terms and conditions.
Moreover, before 2014, there was no clause in the life insurance policies related to suicide. The insurance companies were not used to entertain any such life insurance claim where the insured commits suicide. But from 2014, clauses were introduced related to suicide to cater to the need and suffering of the deceased’s family.
Eligibility to avail life insurance claim in case of death due to suicide
- A claim cannot be made before 12 months – Several life insurance companies mention that if the policyholder commits suicide within the first year or 12 months of the life insurance policy, then his or her family is not eligible for receiving the death benefits. If the policy has completed a year, in such case, the dependents of the insured person can get the benefits of the life insurance claim.
- If the policy gets lapsed – In case the policyholder has committed suicide after the policy has expired, then life insurance claim is not possible. The life insurance claim must be made when the policy is active and running. No claims can be made on a lapsed policy.
Do all companies provide life insurance claim for suicide?
Policy guidelines differ from insurer to insurer as all insurance providers have their own set of terms and conditions. In case of clauses in life insurance policies regarding suicide, almost all insurance companies have separate rules. Hence, one needs to carefully go through all the terms and conditions mentioned in the policy and keep things clear in their mind.
What is the percentage of life insurance claim entertained by the life insurance companies?
- Traditional life insurance policy: In case of a conventional life insurance plan, if the policyholder commits suicide within the first 12 months of the policy commencement, then the beneficiary receives 80 percent of the premiums, and no extra premiums are paid
- Revived life insurance plan: In case of suicidal death of the insured within 12 months of policy revival, then the beneficiary would receive 80 percent of the premiums paid excluding the surrender values. In this, the insurance provider will not entertain –
- In case the policyholder who has committed suicide is below eight years at the time of the policy revival.
- If the policy gets lapsed without obtaining the paid-up value, then nothing is payable.
- Market-linked life insurance plan: In this, if the policyholder commits suicide within the term of the policy, then the beneficiary is entitled to receive 100 percent of the life insurance claim.
Life insurance providers do not offer any suicidal claims if
- If a policy is revived after getting lapsed and in case the policyholder commits suicide within a year.
- If the policyholder falls under the Group Life Insurance plan and commits suicide, then the insurer does not entertain any claim.
- If the policyholder has provided the wrong information to the insurer, then the life insurance claim is rejected.
Overall, suicide is considered as a crime in the court of law and socially it’s a curse to the deceased’s family. Different insurance companies have different guidelines and procedures for the same. Therefore, one should be aware of it. If you are also looking for any such information, you can visit BimaKaro.in and speak to their insurance experts to have a clear idea regarding claims for suicidal deaths.