Yes, many Australian life insurance companies do cover suicide after a specific exclusion period. However, it is important that you refer to the product disclosure statement (PDS) of your policy and make sure you understand the terms and conditions surrounding the cause of death and what constitutes a valid claim.
Suicide has become one of the most common killers of Australians, risin 9.1% from 2016. According to the Australian Bureau of Statistics (ABS), in 2017 suicide was the leading cause of deaths among people aged between 15 and 44 years, and the second leading cause of death for people aged 45 to 55.
Suicide has touched many people’s lives; you might even have considered it yourself at one time. People with a different mental makeup will find certain life events more challenging than others. This paralysing truth might be why one of the most searched topics around life insurance is regarding suicide and whether or not life insurance will pay out.
The pain people feel when surviving the intentional death of a loved one is made worse when that loved one’s income was contributing to maintaining their family unit. With that in mind, we hope this article will answer all your questions regarding life insurance and suicide in Australia.
It’s very important that you carefully review your cover and read through the product disclosure statement (PDS) to ensure you do have life insurance cover should your death be self-inflicted after the specified exclusion period.
While many insurers will pay a death benefit due to suicide after the exclusion period, most insurers will not cover you for Trauma, TPD or Income Protection if the claim was due to a self-inflicted injury or attempted suicide.
Suicidal actions is a very serious risk factor that the insurer will consider carefully. They might ask you to provide the following information:
- How long ago have you attempted suicide?
- What factors lead you to contemplate taking your own life, for example, you had cancer, or you struggle with depression.
- If due to mental health problems, what was the specific date of diagnosis.
- Whether or not you have since sought professional help.
- Past and present medications taken.
- Whether there is a family history of mental health problems or suicide.
Based on the above information and your completed application form, the company will assess your risk. They might accept your application as is, request an additional premium or decline your application entirely. It depends largely on your personal situation and the insurer’s underwriting guidelines around this condition.
When does life insurance not pay?
Understanding the exclusion period
In the past, life insurance companies did not understand mental health or suicide very well. Treatment was limited and proper support services almost non-existent. As a result, suicide was excluded from life policies and families were not paid a claim when their loved ones passed away as a result of suicide.
We’ve learned a lot about depression and mental health issues in the last few years. Today, most life insurance companies do cover suicides in Australia. However, there are still specific conditions applied to obtaining life insurance that pays out if the policyholder were to commit suicide.
Retail (Advised) policies generally enforce a 13 month exclusion period if the life insured’s death is the result of suicide. However, the exclusion period is dependent on your specific policy, and you should carefully review your PDS to determine the exclusion period.
Why exclude suicide from life insurance?
The suicide clause ensures that people contemplating ending their lives do not take out a policy just before carrying out the act. If this were allowed some people might consider killing themselves as a means of providing for their family during times of financial hardship.
The intention behind the exclusion period is also to delay people from acting on their suicidal thoughts. Generally, people won’t plan their suicide, wait a couple of years then go through with it. Usually, something in their lives would have made them change their minds by then.
Does life insurance cover drug overdose?
If you were to die as a result of a drug overdose, whether intentional or by accident, your death benefit might not pay out. However, this depends on several factors, including how the drug overdose happened and the type of life insurance coverage you have.
A death benefit might be paid out in the case of a drug overdose after the exclusion period had passed and if there is no evidence that you had a drug habit before or during your insurance application.
To determine whether your policy covers a drug overdose, please refer to your policy disclosure statement.
Who investigates the death to determine suicide?
When a life insurance claim has been made, proof of death and the circumstances surrounding it lies with the beneficiary or policy owner. Meaning, you need to provide evidence that the insured has indeed passed away.
Generally, because suicide is labelled “death due to unnatural causes”, it is likely that an autopsy will be performed. Similarly, if death was due to a strange circumstance, for example, a car accident, you might also be required to include the police report and or coroner’s report when lodging a claim.
You need to include the following information when lodging a life insurance claim:
- Death certificate.
- Fully completed claim forms.
- Medicare and Pharmaceutical Benefits Scheme Release forms.
- General Medical History Release forms.
What are the suicide rates in Australia?
Australian suicide rates have increased to an alarming number, with an average of 3,027 people taking their own lives in 2015, that’s 909 more people than in 2006. The Australian Bureau of Statistics showed that the majority of suicides were males (75%) and that the Northern Territory had the highest rates of suicide with 21 deaths per 100,000 people.
For the people left behind, suicide is much more than mere statistics, it’s a heart breaking reality and can often lead to financial ruin. Families are in financial distress, trying to juggle the monthly bills with one less income.
Before buying a life insurance policy, the best thing to usually do is shop around and compare the different companies in the market. By comparing various policies and companies, you might find the right one for you and your specific situation.
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