Does life insurance cover suicide?

Posted on Thursday, November 16, 2017 - 14:51

Life insurance is a product that assist you in difficult times. When it comes to dealing with suicide it is no different. It assists you to cancel out one less worry when dealing with the unexpected death of a loved one through suicide. Yes, most insurance companies cover you in the event of a loved one taking their life. However, knowing your Product Disclosure Statement (PDS) will give you greater insight as to what can be covered, and what doesn’t get covered. Here are a few basic things you need to know.

It could happen to anyone at any stage

Many people might assume that this is just something that is most prevalent amongst adolescents. However, statistics released by the Australian Bureau of Statistics (ABS) show that 27.7% of people who take their life are between the ages of 25 and 34. The male population is greatly affected with 75% of suicides being made up of young males between the ages of 15-25 in Australia.

What does this mean for Life Insurance Policies?

Life Insurance plans usually have an exclusionary period. In Australia this exclusionary period stipulates that should anything happen in the period of 13 months i.e deliberately killing yourself or death, you will not be able to make a claim. Some insurance groups could stretch the term indefinitely.

What it won’t cover

Many insurance companies will pay a death benefit due to suicide after the exclusion period. Unfortunately, it will not cover things like trauma, TPD, or income protection if the claim was due to a self-inflicted injury or attempted suicide. This could be difficult news for people who are working, and happen to suffer a mental break down at work due to the untimed passing on of their loved ones.

Factors that might make it hard, but not impossible to get life cover

If there has been an attempt of suicide on your side or a loved one’s side, it will be slightly difficult to find Life cover. Insurers will have to assess your risk factors to see whether they can accept your application or not. This could also mean going through your medical history to help them determine whether you are a risk or not. It will also be a determining factor when it comes to what insurers think they should charge you. You need to be prepared for questions surrounding your health, and possible attempts of taking your own life. This is all done to see whether you are a risk or not. The acceptance of your application could be accepted or rejected depending on a case-by-case basis.

The lack of addressing such issues of mental health in the work space has also caused superannuation funds to take a hit from claims caused by mental illness which has cost employers $10.9 billion a year. This has caused a domino effect, causing insurance premiums within superfunds to increase.

If you have had thoughts of taking your life, or in need of help with your mental health it’s not too late. There is help available at Lifeline 13 11 14. You are not alone.

Resources: 
www.abs.gov.au
www.smh.com.au/business/mental-illness-and-suicide-claims-hitting-superannuation-funds-and-insurers-20140914-10gplh.html
www.lifeline.org.au
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