Buying life insurance gives a policyholder and his or her family a financial protection against unforeseen circumstances. But, what if the policyholder commits suicide? Is the insurer liable to pay the sum assured to the nominee?
Are suicidal deaths covered by life insurance? – This question is one of the FAQs on regulator IRDAI’s portal and among high searches on the Internet. As committing suicide is not considered as an event of uncertainty, people think life insurance players might not be covering it. But, this is not the case as most life insurance companies have plans that cover suicidal deaths, though with certain conditions.
Provisions and waiting period for suicidal deaths
As per IRDAI rules, if the policyholder commits suicide within 12 months of policy purchase then the nominee may not be paid the full sum assured. In such cases, the life insurance company would just provide the nominee a certain percentage of the premium paid during the policy term by the policyholder.
The Insurance Regulatory and Development Authority of India (IRDAI) says, “Under regular/limited premium policy: This policy shall be void if the life assured commits suicide at any time within 12 months from the date of commencement of risk, provided the policy is in force or within 12 months from the date of revival and the company will not entertain any claim except for 80% of the premiums paid till the date of death.”
Under single premium policy as well, the insurance will be void “if the life assured commits suicide at any time within 12 months from the date of commencement of risk and the company will not entertain any claim except 90% of the single premium paid, according to the regulator’s guidelines.
“While the topic of suicide is complex and often avoided due to its heart-wrenching nature, it’s essential to address it. In India, life insurance policies do cover suicide, but there are specific provisions and waiting periods,” says Rakesh Kumar, Founder, Square Insurance.
“There is typically a one-year waiting period after the policy starts. During this time, if the policyholder commits suicide, the insurance company generally refunds the premiums paid to the beneficiary instead of paying out the full death benefit. After the waiting period, most life insurance policies in India fully cover suicides, ensuring that the death benefit goes to the nominee,” Kumar said explaining the IRDAI norms.
It is important for policyholders to carefully review their policy terms to understand the specific conditions that apply to suicide coverage.
Each insurance company may have its own rules, so reading the fine print is crucial, suggests Kumar. “Additionally, maintaining open communication with the insurer can help clarify any ambiguities. Given the devastating and heartbreaking nature of suicide, many people shy away from discussing it. However, it is better to be protected than regretful.”
Having insurance that includes coverage for suicide can provide essential protection during difficult times. Understanding insurance policies and having these important conversations ensure that policyholders and their families are properly safeguarded.
Note: It needs to be understood that committing suicide cannot be a solution to any problem; rather, it only brings more pain to a family. It’s best to seek help and find other ways to deal with problems in life. Plus, the insurance company might not give the money to the nominee of a policyholder in case of suicidal death, citing various conditions.