Suicide Exclusion Clauses: What Happens when a Decedent Commits Suicide?

When a will has been witnessed and notarized, the author’s cause of death becomes mostly irrelevant. Suicide does not affect how a person’s belongings are distributed so long as they were considered “of sound mind” when they declared how they want their estate to be handled. Suicide exclusion clauses are specific circumstances outlined in an insurance policy that exclude coverage for suicide-related deaths.

But that does not mean that suicide is an entirely uncontentious topic in estate planning. When a person kills themselves shortly after amending their estate plan, for example, the argument could be made that they were not of sound mind. If someone wanted to challenge a will changed shortly before the will’s author died by suicide, they may win.

Furthermore, insurance companies have strict suicide exclusion clauses that limit or forbid a payout in cases of suicide. This can have a considerable impact on a person’s estate plan: certain life insurance policies are voided if the policyholder died by suicide within the first year or two of the policy. Even more controversially, health insurance policies might not always cover the medical bills associated with suicide.

The lingering stigma surrounding mental health issues, suicidal ideation, and the topic of suicide has changed over the years, to the point that courts are more comfortable challenging suicide exclusion clauses. Yet while trends are changing, it remains essential for individuals to seek proper legal and financial advice to avoid potential conflicts in their estate plan.

How Does Suicide Impact the Probate Process?

The probate process itself is largely unchanged in the case of a suicide, unless there was reason to believe that the deceased lacked the mental capacity to make certain changes to their estate plan in their final days, if any last-minute revisions exist.

Unlike the common slayer rule, which stops a person’s murderer from inheriting from them, there are no such considerations in cases of suicide, where it was the decedent’s own will to end their life.

The same goes for trusts as it does for wills. Suicide does not alter the provisions of a trust, nor does it change a trustee’s fiduciary duties to both the trust’s grantor and its beneficiaries.

When Are Suicide Exclusion Clauses Relevant?

Suicide exclusion clauses exist for life insurance policies and health insurance policies. In the case of life insurance, the official explanation is that insurance companies do not want to incentivize suicide, and want to discourage fraud.

In cases of health insurance, many insurance companies see suicide in the same vein as self-inflicted injuries or risky behavior, where a bone broken through paragliding would not be covered by insurance because it was “intentionally self-inflicted”. These exclusions are called source-of-injury exclusions.

How Are Life Insurance Policies Affected by Suicide?

In most states, the suicide clause of a life insurance policy must be limited to the first two years of the policy’s timeline, in Colorado, Missouri, and North Dakota, this exclusion period is reduced to one year.

This means that if a policyholder enters into a life insurance plan with an insurer, and dies by suicide after the exclusion period, they are still entitled to a death benefit. However, if they die by suicide before the exclusion period ends, the insurer may void the policy, and decline to pay a death benefit to the beneficiaries.

Suicide Exclusion Clauses in Health Insurance

Health insurance companies often consider suicide to be a form of self-inflicted injury, and may decline to provide coverage for medical costs in the event of a suicide. These aren’t typically known as suicide clauses, as they are expanded to cover other forms of self-injury or risky behavior where the insured assumed certain risks.

Legal Challenges to Suicide Exclusion Clauses

Insurance experts and government policy experts alike argue that suicide clauses are unlawful, especially in health insurance policies, due to existing Health Insurance Portability and Accountability Act (HIPAA) rules.

HIPAA rules state that employment-based health plans cannot discriminate against individuals with certain medical conditions such as diabetes or depression. This means that insurance companies could be forced to pay for medical bills in the event that a person with depression dies by suicide, even if the mental health condition was not diagnosed before the injury, as made clear by a spokesperson for the Department of Labor.

Nevertheless, time and time again families find themselves saddled with hospital bills they did not expect to have to pay after their insurer declined to cover the expenses due to a suicide clause.

These clauses are standard in the health insurance business and may be an important point of consideration for families settling their loved ones’ estate after suicide. Medical costs can be exorbitant, and lack of coverage can deal a serious blow to a family’s savings.

You can take the matter to court – but whether you will win depends on current state law, as well as the circumstances of the suicide, the decedent’s mental health status, whether they were being treated for their condition, and the insurance company’s policies.

The same goes for life insurance suicide exclusion clauses. While they remain the norm, they have been successfully challenged based on discrimination against mental illness, ambiguity and enforceability, and the reasonable expectations of the insured.

Mental health issues often remain an unspoken taboo, which can make getting diagnosed difficult, let alone getting proper treatment. Suicide remains one of the leading causes of death in the country, leaving countless people potentially uninsured for their final medical bills, or bereft of their death benefits.

Multiple courts have successfully ruled in favor of the plaintiff in cases where families sought to overturn a suicide exclusion, yet it’s an evolving situation. Only time will tell whether these exclusions will be found unjust or necessary in the future. If you have other questions on the topics of estate planning, be sure to contact a local professional. Laws change, and new cases can set a precedent for future circumstances.