Legal Definitions - suicide clause

A suicide clause is a standard provision found in most life insurance policies. Its purpose is to limit or exclude the payment of a death benefit to beneficiaries if the policyholder dies by suicide within a specific timeframe after the policy is purchased.

This timeframe, often called the exclusion period, typically lasts for one or two years from the policy's effective date. If a policyholder dies by suicide during this exclusion period, the insurance company generally will not pay the full death benefit. Instead, they might return only the premiums that were paid into the policy, or in some cases, pay nothing at all, depending on the specific terms of the clause and state regulations.

However, if the policyholder dies by suicide after the exclusion period has ended, the suicide clause no longer applies, and the beneficiaries would typically receive the full death benefit, just as they would for any other covered cause of death.

Here are some examples illustrating how a suicide clause works:

• Example 1: Suicide Within the Exclusion Period
  Mr. Henderson purchased a life insurance policy with a standard two-year suicide clause. Unfortunately, seven months after the policy became active, Mr. Henderson died by suicide. Because his death occurred within the two-year exclusion period, the suicide clause would likely prevent his beneficiaries from receiving the full death benefit. The policy might instead only return the premiums Mr. Henderson had paid during those seven months, or offer no payout, depending on the policy's specific terms.

• Example 2: Suicide After the Exclusion Period
  Ms. Chen bought a life insurance policy four years ago, which included a two-year suicide clause. Recently, Ms. Chen tragically died by suicide. Since her death occurred well after the two-year exclusion period had passed, the suicide clause would not apply. Her beneficiaries would therefore receive the full death benefit as if it were any other covered death, providing them with the intended financial support.

• Example 3: Specific Payout Limitation
  When Mr. Davies purchased his life insurance policy, it contained a suicide clause stating that if death by suicide occurred within the first year, the insurer would only return the total premiums paid, not the full death benefit. Tragically, Mr. Davies died by suicide ten months after the policy began. In this scenario, due to the suicide clause, Mr. Davies' beneficiaries would not receive the large sum of the death benefit. Instead, they would only be reimbursed for the premiums Mr. Davies had paid into the policy during those ten months, demonstrating a specific limitation on liability.