As going by the definition, Suicide is “intentional self inflicted harm causing death” or “killing self by one’s own hand”.
About 8,000,00 people commit suicide every year around the world and out of that 17% are from India. With increasing suicidal death toll every year in India, as a nation we fall under the top 12 countries with the highest number of suicides per year. The reasons behind suicide rate may be family issues, psychological depression, financial crisis, relationship issues and many more. It is difficult for the family of the deceased to cope up with such a loss both emotionally and financially if he or she was the sole breadwinner. Most of the time term insurance can prove to be a great financial strength to the family or nominee of the deceased policyholder if he or she passes away in a natural cause of death or accident. But in a suicidal death, that financial security is not available always. Very few insurance companies provide this benefit.
Most of the life insurance companies in India and around the world do not cover suicide in their policy term. However some companies have revised their policies and do cover suicidal deaths but not during the first 2 years of the policy.
All life insurance plans come with a list of exclusions that they do not cover. Certain causes of death are excluded. In case a policyholder passes away due to one of such excluded causes of death then there is no claim against the policy. The nominee of the policyholder will not get any claim amount.
This clause in a way helps to curb the number of suicides that it would have otherwise occurred due to a financial crisis in a family. A policyholder may be provoked to take his or her own life knowing that the family will get the death benefit. A person heavily in debt would have committed suicide keeping in mind that the claim amount will help his or her family to pay the debts. A person commits suicide when he or she finds no reason to live and in most of the cases the only reason that stops them from taking their own lives is the thought of their families. But considering that there could also be other reasons like depression for self injury causing death, some companies have started to cover suicidal deaths after 1 or 2 years. These companies look into the policyholder's mental health condition before passing the application. Policyholders having mental conditions like depression should disclose it before hand or else the claim can be rejected later on.
The other causes of death that a term insurance policy does not cover includes:
- Death caused by accident under the influence of drugs and alcohol.
- Death caused by adventure and sporting events.
- Death caused during pregnancy or delivery.
- Death due to illegal activities.
- Death from HIV AIDS.
- Murder or homicidal deaths aren’t covered.
- Death in war or natural calamities.