Suicide Exclusions, Mental Health & COVID: What You Need to Know

As you may know, September is National Suicide Prevention & Awareness Month. You may not know that it is also Life Insurance Awareness Month. Also, in case you needed another reminder of the dumpster fire that is 2020, we are currently living in a time of a global pandemic. If you are a human being, chances are one or all of these things have affected you in some way or another and will likely pop up again at some point. Instead of continuing to point out the obvious, I’d like to bring a little more awareness to suicide and COVID-19 in the context of life insurance and how it could affect you or your loved ones. 

In July, over half of American adults reported that their mental health has been negatively impacted due to concerns related to COVID-19.^[1]  Let’s combine that with 47 million American adults suffering with mental illness prior to COVID-19^[2], social isolation and the huge increase in drug overdoses over the past two decades^[3], and we have ourselves a recipe for disaster. So much so that the UN released a Policy Brief titled, “COVID-19 and the Need for Action on Mental Health^[4]. The brief also does a deep dive on the statistics surrounding mental health prior to COVID such as: “[S]uicide is the second leading cause of death in young people aged 15-29.” And “People with severe mental conditions die 10-20 years earlier than the general population.” 

Additionally, the brief highlights the fact that suicide and substance-use related mortality were a leading cause of deaths during the 2008 economic crisis due to loss of hope, lack of employment, and rising inequality. This sounds eerily similar to what we are currently facing in America today. With that being said, let’s look at these mental health implications in the context of life insurance. 

When you think of life insurance, you likely think of the run-of-the-mill whole or term life insurance policy. However, accidental death and dismemberment (AD&D), chronic care, and accelerated death benefits all fall under the umbrella of life insurance coverage. Although many policyowners are unaware, many types of life insurance policies have a suicide exclusion which bars a beneficiary from obtaining death benefits. For example, in a whole or term life policy, you may see a provision which states that death benefits will not be payable if the insured commits suicide within the first two years of the policy. In the context of an AD&D policy, you will almost always see an exclusion which states that death benefits will not be payable where the insured dies as a result of suicide. 

Putting yourself in the shoes of a beneficiary, if you’re relying on those death benefits to pay for funeral expenses, medical expenses, or financial support you’re going to be out of luck. However, the insurance company gets to keep all of the premiums paid since the policy’s inception as well as the money they made investing those premiums during the lifetime of the policy. 

It’s no secret that Life Insurance Awareness Month was likely created by financial industry professionals as a marketing tool for life products. However, as a life insurance attorney that sees how a life insurance claim denial can tear a family apart during a time of grieving and loss, I think it’s important for consumers to not just be aware of what is in the contract they’re signing, but to pay special attention to the provisions that may be a cause for concern in the near future. Afterall, life insurance is only an effective financial tool if the claim isn’t denied.  

^[1] https://www.kff.org/coronavirus-covid-19/report/kff-health-tracking-poll-july-2020/

^[2] https://www.samhsa.gov/data/report/2017-2018-nsduh-state-estimates-substance-use-and-mental-disorders

^[3] https://www.cdc.gov/nchs/nvss/vsrr/drug-overdose-data.htm

^[4] https://www.un.org/sites/un2.un.org/files/un_policy_brief-covid_and_mental_health_final.pdf