By: Jay Scheiner JD CLU, Executive Vice President, Agent Support Group
“Does life insurance pay off if a person kills himself?” That was the call I got
from a client—an old friend. I knew he had $5M of life insurance because I
sold it to him; his CPA, a mutual friend, had referred him to me. “Why do
you want to know,” I asked. I got him talking then. He said he just wanted to
understand, in general, how suicide is (or isn’t) covered in a life insurance
contract. While I pressed him, he never actually admitted he wanted to kill
himself; but I knew he recently had a marriage disintegrate and was going
through some tough financial challenges. This was not someone who
would ask a purely academic question just for the sake of knowing the
answer—I was afraid he might consider acting on the information he
gathered. How should I answer him? What was the moral and correct thing
for me to do? Should I tell him the truth? Would the truth make it more likely
that he would end his life?
I gave him the basic facts: if suicide happens within the first two years after
a life insurance policy takes effect, the insurance company doesn’t have to
pay. But if the policy has been in-force more than two years, the insurance
company will pay out the death benefit to the policy’s beneficiaries. While
beneficiaries are not entitled to death benefits if a suicide occurs during a
policy’s first two policy years, they may receive a refund of the premiums
that were paid into the policy before the death. The exclusion for suicides
even includes instances of doctor-assisted suicide in the states that allow it.
It’s known as the suicide clause.
I knew his insurance had been in place more than two years, but of course
I didn’t point that out. When we hung up, I contacted our mutual friend (the
CPA) and we guided our client/friend toward the help he needed.
Does an insurance agent have a “duty to warn”? Do the HIPAA laws come
into play? Generally, a health care provider’s duty to warn is derived from
and defined by standards of ethical conduct, state laws, and court
decisions. HIPAA permits a covered health care provider to notify a
patient’s family members of a serious and imminent threat to the health and
safety of the patient to avert the threat. Insurance agents are not healthcare
providers. The insurance companies and the industry should provide the
standards and guidance if none is written into the law. As insurance agents,
we should have access to a specialized hotline to advise agents when a
client asks about suicide with regard to their policy. We should be
encouraged to connect our clients with suicide prevention professionals as
Given the billions of dollars that the life insurance industry pays out on
claims, the costs incurred by instituting some kind of comprehensive claims
management, reaching out to policyholders with suicide awareness
materials, or by making available access to counseling services if they are
needed, would be justified. We don’t see this being done. That is
unfortunate, because the life industry is in a unique position to raise suicide
If you know of someone who is feeling overwhelmed by thoughts of not
wanting to live or having urges to attempt suicide, there is help available.
● Call 911 or your local emergency number immediately.
● Call a suicide hotline. In the U.S., call the National Suicide Prevention
Lifeline at 1-800-273-8255 any time of day
HIPAA Privacy Rule and Sharing Information Related to Mental Health, U.S.
Department of Health and Human Services
Ending It All by Bill Coffin, Sept. 2012 National Underwriter Life & Health
Does Life Insurance Cover Suicide? By Lucy Lazarony & Amy Danise, Forbes
Advisor March, 2022
Excellent article, Jay. Insurance professionals should allocate time to spend considering ethical questions like these before they come up in anticipation of the opportunity to provide critical services to clients and their families.