Does Life Insurance Pay for Suicidal Death in India?

Yes, life insurance pays for suicidal death in India. But there are certain circumstances and conditions under which death benefits are paid to the beneficiary of the policyholder in case of their demise due to suicide. It is important to understand the guidelines issued by IRDAI for life insurance pay in case of suicidal death.

Which type of life insurance offers suicidal death benefits?

The suicidal benefits are offered under all types of life insurance such as whole life insurance plans, term plans, endowment plans, money-back plans, etc. However, the terms and conditions of plans vary. No death benefits are paid if the policyholder dies due to suicide within 12 months of purchasing the policy.

However, IRDAI (Insurance Regulatory and Development Authority of India) brought a major change in 2014 to provide death benefits to the policyholder’s beneficiary.

What are the provisions under which suicidal cover is paid to beneficiaries?

There are two provisions under which death benefits are paid to beneficiaries of the policyholder:

1. If the insurance policy is purchased before 2014.

   For all the life insurance plans purchased before 2014, the death benefits are paid if more than 12 months have passed since the policyholder has purchased a plan. If the policyholder commits suicide before 12 months of policy purchase then the policy will become null and void and no benefits will be paid to the beneficiary.

   The major agenda of the 12-month clause is to prevent individuals from losing their lives on purpose. Generally, people commit suicide due to the ongoing situations in their lives. The mindset of people usually changes in 12 months.

2. If the insurance policy is purchased after January 2014

   IRDAI launched a new clause in January 2014 regarding the payment of death benefits in case of suicide. If the policyholder commits suicide within 12 months of purchasing the policy they are entitled to a minimum of 80% of the premium paid to date.

   In case the policyholder commits suicide after 12 months of policy purchase then beneficiaries are entitled to full death benefits. This clause applies to all the policies purchased after January 2014.

   Suppose Mr. Akhil, age 35, is a Marketing Manager in a startup. He bought a life insurance policy in 2023 to secure his family financially even after him. He commits suicide due to ongoing stress and depression after 7 months of the purchasing policy. As per the new suicide clause, the insurance company will pay a minimum of 80% of the premium amount to his beneficiary.

What are the circumstances in which insurance companies do not pay for suicidal cover?

As discussed insurance companies do not pay suicidal cover in case a policyholder commits suicide within 12 months of policy purchase. Apart from that there are certain conditions when the insurance company rejects the claim:

• If the policyholder hides any crucial information while purchasing a policy the insurance company may reject the claim.
• If the insurance company discovers that a policyholder commits suicide so that their nominee can get suicidal cover the insurance company may reject the claim

Conclusion

In life insurance suicidal death benefits are provided only under certain circumstances. If the policyholder commits any fraud or hides any crucial information at the time of policy purchase then the insurance company may reject the claim. Every insurance policy has its terms and conditions for suicidal pay. It is necessary to go through policy documents and be transparent while purchasing policy to avoid claim rejection.