Suicide Exclusion Questions

[iuecon99]

I have done some research and it seems that in most states policies will pay off if the insured waits at least two years from policy inception. What if, during that two years, the insured spends some time traveling out of the country? Will the insurer pull out all the stops looking for reasons not to pay out on the policy? I'm not talking about someone committing suicide in Africa, but let's say one were to travel there for a while, while keeping the policy payments current. Any problem there?

 

[scagnt83]

Why do you ask?

 

[BNTRS]

This generally depends on whether or not underwriting would have taken a different action on the offer had it known that the insured planned to travel to the location in question. Contestability doesn't allow an insurer to rescind a contract simply because someone died within the period, it requires proof that the insurer was induced to issue a contract it would not have issued and therefore allows the insurer to void the contract and return the premiums paid.

Most foreign travel had a small impact on an underwriting decision. Africa does pose some potential questions and challenges, so it depends on where in Africa the insured travels.

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And you should note that there is a HUGE difference between suicide and contestable clause.

The former is legally a death benefit while the latter is a rescission of the contract. The net payout may appear to be the same, but they have very specific, different, and important implications.

 

[LGilmore]

No there is absolutely no problem with your question as long as the insured has been truthful on the application. Some states do not honor the 2 year clause if the applicant knowingly lies on the application. They consider it fraud from the get go and the state voids the policy. So it will depend state by state how something may apply. A legal contract cannot not be entered into if one party commits fraud in the process of creating the contract.

 

[yaknow1]

1-800-273-8255 Call these folks. They may be able to help.

 

[WMG]

I have done some research and it seems that in most states policies will pay off if the insured waits at least two years from policy inception. What if, during that two years, the insured spends some time traveling out of the country? Will the insurer pull out all the stops looking for reasons not to pay out on the policy? I'm not talking about someone committing suicide in Africa, but let's say one were to travel there for a while, while keeping the policy payments current. Any problem there?

I hate dealing with issues generically, however, the short answer I would say is no. Let's get more specific -- many applications ask about "do you plan" to travel abroad. In your scenario, if the trip was not planned, not out of the ordinary, etc. -- and the client goes abroad, comes back, hits 2 years, and then commits suicide, generically speaking, this claim should be paid.

I've been in this industry for 30 years. I've paid numerous death claims, a few were precarious situations. I've do a great deal of joint work, have served on field advisory committees for numerous companies. I've worked with companies in many capacities, product development, estate planning, etc.

I had one situation -- extremely rare -- clients paid one premium. Died inside of the two year contestability period, with the second premium bill being in the mail. In excess of $10mm of coverage. Very strange circumstances surrounding the deaths, and yes it was a simultaneous, husband and wife death -- very rare!!! The insurance company -- a premier, triple A rated company -- was more than professional, expedient, and everything else. They investigated, had the head of their claims department involved in the case, and was diligent. But they moved, moved quickly and operated on the highest level of professionalism and integrity. Not one problem. Not even the slightest.

My point being -- I have never once experienced and insurance company "pulling out all the stops" looking for reasons to not pay a claim.

Remember though -- fraud, misrepresentations, and the like...forget about the 2 years.

 

[iuecon99]

Why do you ask?

Been pretty curious about it for a while. Had a friend who thought about doing it to provide for his family after being laid off.

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I hate dealing with issues generically, however, the short answer I would say is no. Let's get more specific -- many applications ask about "do you plan" to travel abroad. In your scenario, if the trip was not planned, not out of the ordinary, etc. -- and the client goes abroad, comes back, hits 2 years, and then commits suicide, generically speaking, this claim should be paid.

I've been in this industry for 30 years. I've paid numerous death claims, a few were precarious situations. I've do a great deal of joint work, have served on field advisory committees for numerous companies. I've worked with companies in many capacities, product development, estate planning, etc.

I had one situation -- extremely rare -- clients paid one premium. Died inside of the two year contestability period, with the second premium bill being in the mail. In excess of $10mm of coverage. Very strange circumstances surrounding the deaths, and yes it was a simultaneous, husband and wife death -- very rare!!! The insurance company -- a premier, triple A rated company -- was more than professional, expedient, and everything else. They investigated, had the head of their claims department involved in the case, and was diligent. But they moved, moved quickly and operated on the highest level of professionalism and integrity. Not one problem. Not even the slightest.

My point being -- I have never once experienced and insurance company "pulling out all the stops" looking for reasons to not pay a claim.

Remember though -- fraud, misrepresentations, and the like...forget about the 2 years.

Thanks! This sounds right to me as well. In general, I think even if the insurer found a note from the insured plotting the suicide two years in advance, they should have to pay. Luckily, it's a moot point as my friend appears to have decided not to go through with it. He made a string of bad financial plays that wrecked his family's finances but after talking with his wife, she wanted him to live more than she wanted a 7 digit life settlement. Good on her! I still was curious about it though, and I am surprised it doesn't happen more often. I suppose there aren't many folks who can wait 2 years to do the deed.