Should suicide affect life insurance?

Depression is not by its very nature a happy subject, but with the pressures put upon us all in today’s world it is unfortunately only too common. To many people who have never experienced it, an instant cure should be possible simply by telling the sufferer to ‘snap out of it’. Sadly the depressed person would be only too happy to be able to comply, but they cannot, for a variety of reasons better known to the psychiatrist than to the layman.

There are many different forms of depression and they manifest themselves in a variety of ways, ranging from what can appear to be ‘just nervousness’ to an overwhelming desire to solve all the problems which are crowding in by committing suicide. It is called the ‘cowards way out’ – a description which takes no account of the individuals state of mind when contemplating or taking this terrible step.

Suicide leaves an unanswered question – should the estate of the deceased be able to profit from their death by claiming payment of life insurance? Here we head into some very murky waters, with some very different points of view being held. Of course a conventional death should give rise to a payment – that is what life insurance is all about – so should the manner of death make a difference? Why should self inflicted death be subject to a different result? Is there not a possibility that we are setting ourselves up for extended and costly enquiries where the death could have been deliberate or an accident i.e. a motoring fatality where the car hit a wall?

Then there is the question whether suicide is illegal or not in the UK, and it is a problem trying to find someone with the definitive answer, although it is very clear that assisting in a suicide is definitely not legal. If suicide is illegal, should an action outside the law be able to profit someone, even though they had no direct involvement with that action? Murky waters indeed.

With more than 20,000 deaths by suicide in England and Wales over a four year period, which is double the number of road fatalities, the above questions are rather more than academic. What about the reaction by the people ‘at the sharp end’, that is the insurance companies who have to determine whether payment should go ahead?

Here too opinions vary. Some will pay out only if the policy was taken out a ‘reasonable’ length of time before the suicide; ‘reasonable’ being translated in most cases as being 2 years. This period is applied to the policy to avoid fraudulent claims, where the intention to commit suicide was present at the time that the policy was taken out.

Anyone who has attempted suicide at some time needs to declare the fact on their application form, says a spokesperson for the Association of British Insurers. This may bar them from life insurance with some companies, or may cause a significant increase in their premium costs. The approach to them by the insurers will be to treat them as they would treat a psychiatrically ill applicant.

Although Standard Life has paid out on life policies held by people who subsequently prove to be successful suicides, they operate on the same principal although without applying the time limitation clause. It is their intention to thoroughly assess the risks before the cover is agreed, with any previous suicide attempts limiting or excluding the cover.

Your doctor’s notes are invaluable to a potential insurer, providing as they do a medical history which will point up any aberrations which may be a sign of potential suicide risk. It is equally possible that they will show that any depression is not a serious underlying state and that your risk factor is low.

Depression on its own is no reason for a life policy to be refused, nor indeed is a previous suicide attempt necessarily a bar.  You will need to find a broker with whom you can have a discussion which will cover all aspects of your illness or depression. You need to be absolutely frank and conceal nothing of previous suicide attempts and any previous or subsequent treatment whether as an outpatient or not.