Life insurance & suicide in the UK
Suicide prevention in the UK has been credited for the recent decline in the number of suicides, but unfortunately, it’s still very much an everyday occurrence.
Over the past 3 years, we have seen a decline in the number of suicides, but that doesn’t mean it’s a subject which can be ignored.
In 2016, 4,941 people in the UK committed suicide with the number of men being 3 times higher than that of women. That said, female suicide rates are higher than they have been in a decade.
According to insurer Aegon, 6% of their life insurance claims in 2017 were made as a result of suicide.
Losing a loved one not only brings heartbreak as you try to decipher their reasoning, but it can also present severe financial burdens.
It’s a common misconception that life insurance doesn’t pay out if the cause of death is suicide, this simply isn’t true! But it’s also not that simple.
It’s all in the policy’s small print. There are certain clauses written into a life insurance policy that determines whether or not a pay out is issued.
The suicide clause, (or ‘suicide provision’)
The suicide clause is the period of time following the start of the policy in which a pay out will not be made if the cause of death is suicide.
This clause exists to protect the insurer and is designed to stop vulnerable individuals from committing suicide, for the purpose of securing a pay out.
However, on occasions, if a suicide is committed within the period stated by the suicide clause, insurers will refund the premiums which have been paid to date.
So, even if the suicide was committed during the suicide clause period, it’s still important to contact the insurer.
The suicide clause in summary:
- Defines the time period at the beginning of the policy in which if a suicide is committed, a pay out will not be made
- The clause is typically 2 years, but can occasionally be 12 months, depending on the insurer
- After this period, a full pay out is likely to be issued, even if the cause of death is suicide
- The clause usually restarts if an existing life insurance policy is replaced with a new one
- In 2017, 0.5% of claims made to Aegon were declined due to a breach of the suicide clause.
The contestability clause, (or ‘contestability period’)
The contestability clause refers to the period in which an insurer can investigate the death of a policyholder.
Whilst the suicide clause refers solely to a death caused by the policyholder, the contestability clause applies to any death within the period stated by the policy. The contestability clause commonly runs for the same length as the suicide clause.
For example, if the policyholder dies of cancer, the insurer has the right to review medical history and autopsy reports to determine whether or not the policyholder was a smoker or substance abuser.
If this is deemed to be the case and it was not disclosed during the application process, the insurer can decline to pay out.
The contestability clause in summary:
- Defines the period of time at the beginning of the policy, in which if the policyholder dies, the insurer has the right to investigate the cause of death
- The insurer can use autopsy reports, medical reports and interview family/friends
- It can determine whether the cause of death was an act of suicide or not
- If, as a result, the insurer deems the death to be a suicide they’re not obligated to issue a pay out if it was within the period of the suicide clause.
A pay out can be denied on grounds of non-disclosed information (or ‘non-disclosure’).
This is when the policyholder withholds crucial information during the application, regarding their mental or physical health, smoking habit or substance abuse.
In this instance, regardless of whether the suicide clause has lapsed, a pay out can be denied if the insurer identifies key information which had not been disclosed.
For example, 90% of all suicide victims suffer from a mental illness. If a policyholder has a mental illness or alcohol/drug dependency and hasn’t disclosed it, then the insurer doesn’t have to pay out, regardless of the cause of death.
This highlights the importance of being open and honest when applying for life insurance. If you’re worried about the impact your habits or wellbeing will have on your premiums, start your quote today and one of our consultants will be happy to help run through your options.
Sometimes the suicide and contestability clauses don’t exist.
The aforementioned suicide and contestability clauses tend to be present with regards to most private life insurance policies.
However, group life insurance paid by an employer doesn’t usually have a suicide clause. This means that it doesn’t matter how soon after the start date of a policy suicide is committed, a pay out will still be made to the policyholder’s beneficiaries.
Sometimes a policy will state no pay out, even if the cause of death is suicide.
On rare occasions, some policies will have a ‘no suicide’ element, regardless of the time after start date that the event occurs. In this instance, under no circumstances will a pay out be made if the policyholder commits suicide.
Getting life insurance following a suicide attempt
If you have previously attempted to commit suicide, it’s still possible to obtain life insurance.
The application will, however, most likely go through a manual underwriting process. The information regarding when the attempt took place and any treatment which has been received since will be taken into account.
This information will then be used to calculate your monthly premiums based on the level of risk the insurer believes you pose.
Life insurance and suicidal thoughts
If you have previously experienced suicidal thoughts and these have been shared with a professional, it’s also still possible to obtain life insurance.
The process would again go to manual underwriting, where information regarding your thoughts such as time since the occurrence and treatment received will be taken into account.
As a beneficiary
Being the beneficiary of a policyholder who has committed suicide can be very upsetting, daunting and also confusing.
There are 3 simple steps for the beneficiary to take:
- Review the life insurance policy to determine the terms of the suicide clause. Was the suicide committed within this period?
- Always contact the insurer. Even if the event took place during the suicide clause, some insurers offer a payback of any premiums already paid
- Talk to an authority. Losing a loved one is difficult no matter what the cause. But when a loved one chooses to end their life, it can often leave those left behind feeling even more hurt and confused. Add this to the financial pressures and it’s no wonder many beneficiaries would feel the weight of the world on their shoulders. There are a number of agencies detailed at the bottom of this article who can offer advice or just a safe space to talk.
Impaired risk teamSuffering from mental health issues or substance abuse doesn’t mean you can’t secure life insurance.
When applying for life cover, many people withhold information on their health (both physical and mental) and substance abuse due to the fear of being unable to get life insurance. But this isn’t the case.
As detailed above, it’s essential you’re completely open and honest when applying for life insurance as any non-disclosed information can lead to a claim being declined.
At Reassured, we offer a specialist impaired risk team. This dedicated team help customers with health issues, substance addiction and any other issues which may make getting life insurance more complicated than usual, to find cover.
If you think you may benefit from using our impaired risk service, get in touch with one of our team today.
Does life insurance cover a drug overdose?In terms of life insurance, drug use is deemed as ‘risky behaviour’.
With regards to life insurance and drug overdose, three aspects are taken into consideration when determining whether or not a pay out should be made:
- Type of drug
- Honesty about previous drug use
- Accidental or intentional.
Lying during the application about your drug habits could not only deem your policy invalid but if the dishonesty is identified prior to your death it constitutes insurance fraud and could result in fines or even jail.
Life insurance and intentional drug overdose
Intentional drug overdoses are often covered by the suicide clause meaning that if the overdose occurs within the first two years of the policy, it’s deemed invalid and a pay out will not be issued.
Equally, a pay out can also be denied if the policyholder was dishonest about their drug use during the application process.
Generally, overdoses which occur as a result of illegal substances or unlawfully consuming prescription drugs will be considered intentional drug overdoses.
This is because the insurer can conclude that the policyholder was aware of the possible risks involved.
Life insurance and unintentional drug overdose
As opposed to falling under the suicide clause, an unintentional drug overdose generally falls under the contestability clause.
This means that if it occurs during the first two years of the policy, the insurer has the right to investigate.
Dependant on the findings of this investigation, a pay out could be denied if it’s deemed the policyholder was dishonest about their drug habits.
Death from lawfully prescribed drugs is more likely to be viewed as unintentional.
Previous drug use and life insurance
It’s likely that if you declare previous drug use during the life insurance application, they’ll write into your contract that upon your death, autopsy and toxicology reports can be obtained.
It’s also possible that you’ll be subjected to life insurance drug tests prior to approval.
In almost all cases, use of illegal drugs (with the exception of marijuana) will result in you being denied life insurance. The use of marijuana is likely to increase the cost of your monthly premiums.
Previous illegal drug use is likely to result in a large amount of questioning to determine the severity of your habit.
Abstinence of drug use for 3 years is likely to result in approval with loaded premiums, whereas an abstinence of 15 years plus is likely to result in approval with standard premiums.
It’s unlikely you need to declare the use of illegal drugs if you only experimented a handful of times many years ago.
Life insurance depressionWith regards to depression, a major concern for insurers is the likelihood it will result in your demise, predominately through the act of suicide.
Secondary to this is the correlation between poor mental health and poor physical health, which can result in an abundance of fatal illnesses.
When applying for life insurance with depression, it’s highly likely you’ll be required to answer questions regarding the following:
- Age of diagnosis
- Events relating to illness
- Most recent episode
- Suicidal attempts
It’s also very likely that your GP will be asked for a report regarding your illness. If you suffered from a one-off incident 5 or more years ago, it’s likely that your life insurance can go ahead as standard.
The more recent and more severe your episodes, the more likely it will inflate the cost of your monthly premiums. Previously being declined life insurance due to depression doesn’t mean it’s impossible to obtain life cover.
If you suffer from depression and are finding it difficult to get accepted for life insurance, using a specialist service such as Reassured’s impaired risk team will help you obtain the cover you need.
They take into account your specific circumstances and apply on your behalf to those insurers most likely to accept your request for life cover.
Are you experiencing suicidal thoughts?
If you’re experiencing suicidal thoughts the single most important thing is to talk to someone about how you’re feeling.
There’s always someone out there to support you and you don’t need to face things alone.
If you don’t feel you can talk to a friend or family member then you can contact any of the following bodies for free:
- Samaritans – Call: 0116 123 or email: email@example.com
- Papyrus (for under 35) – Call: 0800 068 4141 or email: firstname.lastname@example.org
- The Silver Line (for older people) – Call: 0800 470 8090
Have you lost a loved one?
Remember, there are always people to talk to during this incredibly difficult time. As well as the organisations mentioned above there is also:
- Cruse Bereavement Care – 0844 477 9400. (A list of local services can be found on their website)
Finally, if you’ve recently lost a loved one as a result of suicide, don’t be deterred from making a claim on their life insurance.
Get in touch with the insurer and enquire exactly what it is you’re entitled to.