Suicide and life insurance : the legal and ethical implications of suicide exclusion clauses in life insurance policies

Abstract

The main purpose of suicide exclusion clauses is to protect life insurance companies from fraudulent activities such as where a policyholder plans and takes their own lives for financial gain. The typical exclusion period is 24 months, however, there are other insurers whose exclusion periods range between 6 and 12 months. Suicide deaths have always presented a problem for the insurance industry when it comes to the assessment claims and the payments of death benefits. Where a policyholder dies by suicide during the exclusion period, the insurer rejects the benefit claim, and either pays back the premiums received until death or does not pay out at all. When dealing with claims relating to suicide deaths, the insurer does not consider the circumstances surrounding the death, such as an inquiry into the policyholder’s mental state. This shows that mental health illnesses are not considered in this regard. The courts have upheld the rejection of claims by insurers to the detriment of beneficiaries, who face difficult financial and emotional distress after the death of a loved one by suicide. This dissertation will show the unfair treatment of people living with mental illnesses by life insurance providers and how this amounts to unethical conduct by these companies and provide a call to declare suicide exclusion clauses unlawful on the basis of discrimination.