Will life insurance pay-out for suicide, drink driving or cancer?
Life insurance helps to provide financial security for your dependants if anything were to happen to you. However, there are certain circumstances that may fall outside of your insurance policy, meaning your beneficiaries might not receive a pay-out in the event of your death. Certain causes of death, such as suicide, drink driving and cancer, may affect any pay-outs from your life insurance. It is important to fully understand the terms and conditions, as well as what circumstances are covered
Yugi the Giraffe - 2 June 2019
Life insurance helps to provide financial security for your dependants if anything were to happen to you. However, there are certain circumstances that may fall outside of your insurance policy, meaning your beneficiaries might not receive a pay-out in the event of your death.
Certain causes of death, such as suicide, drink driving and cancer, may affect any pay-outs from your life insurance. It is important to fully understand the terms and conditions, as well as what circumstances are covered, before agreeing to a life insurance policy.
Will life insurance pay-out for suicide?
There are certain circumstances where life insurance will not pay-out for suicide. This is called the suicide clause, or “suicide provision”, which is a period during the start of the life insurance policy where beneficiaries will not receive the pay-out in the case of the policyholder committing suicide.
The suicide clause typically lasts for 2 years, however, sometimes it can be as little as 12 months. This will depend on the insurer. When this period is over, the insurers will be likely to pay-out in the event of a policyholder’s death, even in the case of suicide.
The suicide clause is used to stop those who are vulnerable from committing suicide in order to secure the pay-out, whilst also protecting insurers.
Insurers may refund premiums from the start of the life insurance policy up to the suicide of the policyholder. Therefore, even if the death is due to suicide, and during the suicide clause, it is important that you contact the life insurance provider.
What is a contestability clause in life insurance?
The contestability clause is another period throughout the life insurance policy where the insurer is able to investigate a policyholder’s death. This type of clause will commonly run during the same length as a suicide clause.
For example, when a policyholder dies from a certain disease such as cancer, the insurer can then look through their medical records, as well as the autopsy report, to check if smoking or substance abuse played a role in the cause of death. Insurers may also be able to interview family and friends. Read our guide on how smoking impacts life insurance prices.
If smoking or substance abuse are found, and were not disclosed by the policyholder during their application, the insurer does not have to pay-out to their beneficiaries.
This is also applicable to deaths which may have been caused by suicide. Insurers can investigate numerous aspects of the case to help them determine whether the policyholder took their own life, and therefore whether they should pay-out to beneficiaries.
Will life insurance pay-out for drink driving?
Insurers might not pay-out if the policyholder’s death was caused by drink driving, specifically if they were driving whilst under the influence. This is because death from drink driving is considered to be self-inflicted, as it is commonly known that driving whilst intoxicated can cause accidents, injuries and death.
Your life insurance provider will not typically pay-out for self-inflicted deaths, such as suicide or drink driving. This is firstly to protect vulnerable people from killing themselves to ensure their beneficiaries get a pay-out, and secondly to prevent insurance fraud, protecting the insurer from this scenario.
Whilst this has been considered a controversial way of thinking, insurers insist that the risks of drink driving are public knowledge, thereby making any injuries or death that arise from it self-inflicted.
Will life insurance pay-out for cancer?
If you are completely transparent in your application about your medical history, life insurance companies should pay-out in the event that the policyholder dies of cancer. However, it may be difficult to take out a life insurance policy in the first place if you were diagnosed with cancer beforehand.
Insurers will take down various different details of an applicant’s medical history when assessing an application. This can include any cancers, the type and the stage of it.
Most life insurance companies will not issue policies for applicants unless they have recovered from the cancer for 2 to 3 years, and when first issued, premiums are likely to be more expensive.
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