Suicide and Life Insurance

Abstract

Much has been written about the history of suicide and, notably, about societies that condemned both the act and the actor, resulting in a perpetuation of suicide being stigmatized in many cultures. One aspect of this perceived stigmatization involves exclusionary clauses in life insurance policies that reject paying benefits to survivor-beneficiaries of the decedent if the decedent has died by suicide within a prescribed time frame. From the perspective of the individual, life insurance is designed to protect the estate of a decedent from a significant financial burden. From the insurer’s perspective, there are essentially 2 reasons for having a suicide exclusion clause: limiting risk and preventing or discouraging fraud. This column examines these rationales in light of the estimated few suicides that do occur during exclusionary clause time frames. Observations are made about the effect of these clauses on those impacted by the loss of a loved one who died by suicide within the exclusionary time frame. An examination of the perspectives of both the life insurance industry and the impacted survivors of suicide decedents raises questions about what are reasonable and appropriate exclusionary clause time frames that protect both the insurer and survivor-beneficiaries. The forensic expert consulting on such cases should be cognizant of these competing perspectives and engage in therapeutic assessment whenever possible, identifying opportunities to promote thoughtful suicide postvention.

Suicide has long been stigmatized and, to this day, remains criminalized in some 25 countries.¹ Much has been written about the history of suicide and, notably, societies that condemned both the act and the actor,^2–5 or, more severely, punished the suicide decedent, for example, by denying burial in consecrated ground and desecrating the body.

Starting in the 11th century in England, the role of the coroner emerged as a representative of the crown whose task it was to convene a postmortem jury to decide whether the decedent was in possession of reason at the time of killing himself, thus guilty of self-murder, a crime (felo de se), or not of sound mind (non compos mentis), thus innocent of a crime. In medieval England and with the adoption of English common law in some American colonies, punishments extended from the victim of suicide to the impacted family as well. Where a verdict of felo de se was rendered, the decedent’s family forfeited goods and possessions to the king.⁶ The consequences to the bereaved were significant, making impacted family loss survivors paupers.⁷ These punishments of family members persisted until public attitudes became more tolerant and enlightened as views of suicide and mental illness shifted with the emergence of the medical profession in the mid-1800s.^2–5 The confiscation of property was not abolished in England until the 1870s.⁸

The bereavement of impacted loss survivors (referred to as “survivors” in the rest of this column) is arguably different than that experienced by survivors of other manners of death, notably in feeling more socially isolated and stigmatized, although the evidence for this may be more qualitative than empirical.^9–11 Undeniable, however, is the profound impact suicide has on family members; and for some, much like that experienced by families in medieval England, that impact is economic and experienced as punitive. Though the subject has received virtually no scientific investigation, the dire emotional consequences of suicide bereavement complicated by an adversarial legal process and the potential for financial peril seem self-evident.

Suicide postvention extends prevention efforts by providing immediate and ongoing support to those experiencing a suicide loss. Such support is essential to mitigating negative outcomes, such as depression and suicide risk, in a cohort of individuals now at increased risk due to their own exposure to suicide.¹² Forensic experts consulting on cases involving questions about suicide death and exclusionary clauses are likely to encounter unique suicide postvention opportunities.

SUICIDE AND LIFE INSURANCE EXCLUSIONS

Life insurance is designed to protect the estate of a decedent from a significant financial burden. Broadly described, life insurance companies (insurers) establish annual policy premiums to be sufficient to fund future claims for death benefits by anyone they insure based on expected annual mortality rates of people at different ages, in addition to their administrative costs, and calculated profits. Policy premiums are adjusted based on factors such as the health, family medical history, and lifestyle of the applicant (eg, driving record, body mass). Insurers earn money by not having to pay out insurance benefits early (vs. late) in the life of a policy. When an individual takes out life insurance, the insurer gambles that the individual will not die prematurely. Because some activities present highly elevated risks of premature death, insurers have specific exclusion clauses that allow the denial of death benefits if, for example, the insured died as a consequence of engaging in dangerous activities such as hang gliding or flying a private aircraft; from participation in illegal activities, inclusive of driving at excessive speed and/or not wearing a seatbelt; or from high-risk jobs, such as underground mining.

A common exclusion clause written into insurance contracts regards death by suicide. Suicide presents a significant problem for the insurance industry in that it is assumed (a) to be under the control of the individual (see below) and (b) that having death benefits payable to beneficiaries could encourage the insured individual to bring about death prematurely.¹² Particularly for individuals burdened by intense financial strain, the belief that “to my family my death has more value than does my life” may serve as a siren call to provide financial benefits through the taking of one’s life.

Insurers consider that suicide offers the insured an unfair advantage in the risk ratios established by mortality tables. This advantage is generally viewed by the insurer as a fraudulent act needing to be discouraged and against which they need to protect themselves. To do so, the suicide exclusion clause, which has been in existence since the 19th century,¹³ precludes paying out death benefits for death by suicide if that death occurs within a defined period of time from the date of the insurance policy’s inception. If a suicide does occur during this excluded period of time, the insurer typically will merely pay back either all or a proportion of premiums paid to date, sometimes with interest earned.

In an article published in 1977, Barraclough and Shepherd¹⁴ referenced a British publication that summarized policy provisions of 100 life insurance companies, presumably all operating in the UK at that time, with findings that only about half had suicide exclusion clauses and, of these, the time period of exclusion ranged from 1 to 2 years. Table 1 offers a sampling of the typical and current parameters of suicide exclusion clauses in various countries across the globe. There is no uniformity in the length of time specified in the suicide exclusion clauses that are typically written by insurers, although these generally vary from 1 to 3 years in length. Some exclusion periods are established by national laws, others, as in the United States, by state statutes or insurance commissions, and still others by individual insurers.

TABLE 1 - Suicide Exclusion Clauses by Country

Country	# Months in Exclusion Clause	Comments
Austria	36	In practice, a 3-y period is applied, but there is no legal obligation to do so
Australia	13	Some insurers specify as long as 24 mo
Canada	24
China	12	UNLESS the individual is under 10 y of age or mentally unable to “control their behavior”
Denmark	12
Estonia	24	UNLESS suicide is a result of mental pathology, which excludes free will
France	12
Germany	36	Does not apply if suicide was committed in a state of pathologic mental disorder that precludes free will
Hong Kong	12
India	12	80% of premiums repaid if within 12 mo, UNLESS the life insured is younger than 8 y of age, in which case the clause does not apply
Israel	12	In some policies, suicide is not covered at any time
Italy	12
Mexico	0	Suicide is totally excluded from any insurance policy
New Zealand	13
Norway	12	UNLESS relatives/beneficiaries can show that the insurance was bought with intentions other than suicide
Pakistan	0	Suicide is not covered at all, as suicide is still criminalized in Pakistan
Republic of South Africa	24	Beneficiaries only receive all premiums paid
Slovenia	12	If suicide occurs within 3 y, only a mathematically derived proportion of benefit is paid
Switzerland	“First several years”	www.moneyland.ch/en/death-benefits-insurance-comparison
Taiwan	12
UK	12	May vary from insurer to insurer
United States	24	In all states except Colorado, Missouri, ad North Dakota, where the period is 12 mo

Two studies by Yip and colleagues^15,16 examined the impact of suicide exclusion periods in Hong Kong and Australia. In both studies, the authors concluded that these exclusion periods did serve to affect the timing of suicides, with suicide rates decreasing during the exclusion period and increasing soon after.

As noted above, from the insurer’s perspective, there are essentially 2 reasons for having a suicide exclusion clause: limiting risk and preventing or discouraging fraud (unfair advantage).

Limiting Risk

Life insurance companies are in the business of making money. Life insurance companies offer income protection for the insured’s estate/dependents based on their best estimates that the company’s pool of insured individuals will live lives of some reasonably expected duration, during which they will pay annual premiums for that protection. For life insurance companies to ensure profits, they must limit their exposure to unnecessary risks, to wit those posed by premature deaths under the control of the insured. If individually determined premiums charged are to be based primarily on statistically derived estimates for how long an insured person will live, the cost of those premiums can be reasonably established if deliberate and intentional deaths are excluded or otherwise delayed. Plainly stated, having a suicide exclusion clause helps to limit the insurer’s losses during the 1- to 3-year exclusionary clause time frame (Table 1) and protect its profits. Moreover, it protects its other policyholders by capping premiums that otherwise would necessarily increase to cover the costs of fraud.

Discouraging Fraud

As noted above, applicants for life insurance who have reason to end their lives may seek to insure their life so that their intended death will benefit their families financially. Doing so defrauds the insurer. As such, it is an illegal act and the law does not allow a perpetrator of a crime to profit from that crime. The motivation for defrauding an insurer more often than not is serious financial strain; concurrently, the motivation must entail a felt responsibility for supporting the family financially and to not unduly burden bereaved survivors with further economic struggles. Indeed, Joiner¹⁷ argued that instances of suicide in the context of financial strain support his concept of perceived burdensomeness, a belief that one’s existence is a drain on the resources of others, hence a source of desire for suicide.

Financial strain or serious financial problems are common contextual stressors, hence risk factors for suicide. Systematic reviews and meta-analyses, cross-sectional studies, and case series from around the globe have found significant relationships between measures of financial strain (eg, long-term unemployment, housing instability and foreclosure, income decline, credit problems, debt, and bankruptcy) and both suicide attempts and death by suicide.^18–22 An analysis published by the Reinsurance Group of America²³ found that the largest increase in suicide rates during the 2008 economic crisis was among policyholders with the largest face amount of insurance (above $1 million US), suggesting that financial strain, indeed, was a motivating factor.

In contrast, a retrospective evaluation of life insurance contracts held by 468 persons who died by suicide within the suicide exclusion period described in German policies found that only a few persons acquired their insurance for financial advantage for their relatives and concluded that the 3-year exclusion clause was “an effective barrier against misuse.”²⁴ However, only a single study in the literature, published by Kodama et al,²⁵ has specifically examined these financial strains as motivational correlates of suicides for the purpose of gaining “insurance payouts,” finding less than one half of 1% of suicides in Japan to be so motivated.

No similar data for any other country have been collected and published; but the Kodama and colleagues’ study allows for a very rough estimate of the equivalent number of policyholders who might be considered to be similarly motivated to defraud insurers. In 2019, there were 44,751 suicides in the United States in individuals 20 to 85+ years of age. Fifty-seven percent of US adults carried life insurance in 2019; hence 25,508 of those lives may have been insured.²⁶ Assuming that as many as one half of 1% intended to defraud their insurer, the number of suicide decedents at issue would amount to an N of 128. In England and Wales in 2018, an estimated 2500 adults died by suicide.²⁷ Assuming that 41% of these decedents carried life insurance²⁸ (N=1025) and that 0.5% of these insured individuals acted to defraud their insurers, the resultant number of defrauding claimants would amount to an N of only 5 decedents. This estimate quantifies the opinion expressed almost a half-century ago by Barraclough and Shepherd that “Fraud by suicide must be excessively rare in England.”^14(p46)

If these estimates are anywhere near the true numbers of suicides enacted annually for financial gain, it would be reasonable to conclude that the financial risk for any one insurer would be rather inconsequential, especially in light of the costs incurred by insurers to defend lawsuits initiated by beneficiaries who have been denied life insurance proceeds upon the deaths of their loved ones within the exclusionary period.

SUICIDE INSURANCE CLAIMS AND SUICIDE AS AN AFFIRMATIVE DEFENSE

If a beneficiary is denied payment of benefits under the provisions of the exclusionary language on which the insurer relies, he or she has the right to challenge the insurer’s determination that the death of their loved one was a suicide by claiming that the decedent did not die by suicide. In the United States. the law knows no stronger presumption than that against suicide (ie, the decedent did not die by suicide), hence the insurer bears the burden of proof to defend its determination that the decedent did die by suicide, depending on the jurisdiction by either a “great preponderance of the evidence,” “clear and convincing evidence,” or “beyond a reasonable doubt.”^12,29 The basis for this presumption against suicide originated in medieval England so as to avoid the harsh penalties inflicted by English coroners’ juries.²⁹

Issues of Establishing Intent

As noted above, the question of whether or not an insurance applicant was fraudulently motivated (ie, premeditated) by a desire for financial gain for his or her beneficiaries rests on the presumption that the applicant had in mind at the time of the application for life insurance a goal of deliberately taking his or her life for that purpose. As this generally would be unknowable without a psychiatric examination and suicide risk assessment conducted with an applicant before a policy was signed into force, the exclusionary clause shifted the question of the decedent’s intention to the time of the act leading to death; hence, if the death could be convincingly demonstrated to have been intentional, the provisions of the exclusion clause would be enforced. Given this, if a beneficiary could provide evidence to the court that the loved one was incapable of forming that intent due to serious mental impairment (eg, psychosis, organic disorder, acute alcohol or drug intoxication), the court then would have to rule the death to be other than suicide. Accordingly, almost all insurers add language to the suicide exclusion so that the state of mind of the insured at the time of the act presumably becomes moot. The typical language in most policies now reads, “If the insured dies by suicide, while sane or insane … .”

This phrasing does not remove from the insurer the burden to prove the death was a suicide (ie, a self‐inflicted death) with evidence—either explicit or implicit—of intent to die.³⁰ Although a majority of courts have upheld the “sane or insane” clause, a minority of courts have held that, if it can be shown that the decedent’s mental capacity at the time meant that he/she did/could not realize that the physical consequence of the act would be death, the death would not be legally determined to be a suicide.^12,31 As noted in Table 1, in some countries (eg, Estonia and Germany), this is codified as denying imposing the exclusionary clause if a serious mental disorder “that precludes free will” was present.³² Further, in some countries, the suicide exclusion clause incorporates this issue of mental capacity (affecting, in this case, the ability to understand the permanence of death) by defining the insured’s age as a mitigating circumstance. China, for example, exempts the clause if the insured individual is under 10 years of age; India does so if the insured decedent is under the age of 8.

A coroner’s or medical examiner’s certification that an insured’s manner of death was a suicide, unto itself, is insufficient in legal cases brought by a beneficiary who challenges a denial of benefits, as this determination is an opinion, not informed by uniform standards, and is open to litigation. In such legal challenges, a psychological autopsy has proven to be valuable to establish the decedent’s state of mind, motivation, and intention at the time of death.³³

In an article discussing the role of suicide in tort and insurance litigation, Simon et al³⁴ stated that “Intent is a slippery concept.” The assessment of intent requires an evaluation of the decedent’s mental capacity to conceive (have the idea), plan, and carry out a suicide.³⁵ Models for this assessment have been proposed, and scales have been developed. For example, the Pierce Suicide Intent Scale^36,37 focuses on such constructs as the circumstances of the act (timed to limit potential intervention, relative isolation), precautions taken to avoid discovery, the presence of a suicide note and evidence of premeditation. Similarly, the Beck Suicide Intent Scale³⁸ assesses, in addition to the above variables, evidence for the wish to live and the wish to die, and reasons for both; the availability of method; and final acts in anticipation of death. These scales were developed to assess intent either in an individual’s ideation or relative to a recent attempt, but their constructs are appropriate for application in a retrospective death investigation and thus may usefully guide forensic assessment in such matters.

THE EXCLUSION CLAUSE FROM THE PERSPECTIVES OF IMPACTED FAMILY MEMBERS

Colt³⁹ described the impact of surviving suicide as “the weight of centuries of accumulated stigma.” Cvinar⁹ noted that “the act of suicide condemned the survivors as well as those who committed suicide.” Impacted loss survivors (survivors) experience a myriad of feelings and psychological pain in the immediate aftermath of their loved one’s suicide, including shock, feelings of guilt, shame, and devastation at their loss. Particularly at that most horrific time, to be denied life insurance benefits or to undergo investigations and questioning about their loved one’s death compounds the grief and bereavement they are enduring and may result in angry reactions. Time and again, those describing the sequelae of suicide loss cite the unpleasant experiences suffered by grieving family members that are associated with inquiries and negative and nonempathic interactions with police, coroners/medical examiners, and insurance companies/agents/investigators.^40–42

Certainly, the financial effects of the denial of benefits—harkening back to the times of property confiscation and forfeiture—may be huge for survivors of suicide, especially when the decedent represented the sole or a major provider of the economic support of the household. The loss, therefore, has not only a huge emotional toll but also a potentially large instrumental impact on the family of the decedent in particular. Although the reason for denying benefits may be understood as reasonable from an insurer’s business perspective, it must seem like a second loss of sorts and a reinforcement of the branding of stigma and shame that survivors experience in the wake of their loss and toward the memory of their loved one. Even the delay or difficulties associated with payment can create feelings of stigmatization.⁴³ Stigma, as experienced by survivors of suicide, has been suggested to complicate their bereavement,^44,45 and denial of insurance benefits would likely be perceived as stigmatizing. Goffman⁴⁶ described the social experience of stigma as “a deeply discrediting attribute, reducing a person from a whole and usual person to a tainted and discounted one.” In addition to the tarnished memory of the lost loved one, results for the suicide survivors might include the experience of social isolation, less support from others, and negative attitudes toward themselves following the loss.⁴⁷ It has also been noted that stigma, with its accompanying shame and embarrassment, might result in survivors staying away from the support and other resources they might need. In the context of the exclusion clause, it is possible that in some cases, family members may even try to conceal a suicide as the cause of death.⁴⁵

While the consulting forensic expert must judiciously attend to the medicolegal issues at hand (ie, does suicide represent the most medically probable cause of death), in such cases, professionalism mandates consideration of the aforementioned emotional import such determinations carry for survivors, and therapeutic assessment when feasible. Candilis et al^45(p121) noted that:

We raise the ethics for our specialty by defining professional duties as not only serving the ends of justice, but also obliging us to join with our evaluees and their families. This allows sensitivity to the problems of the judicial system itself, and to the subjective influences that affect experts in the conduct of their difficult work. Humbly accepting the setbacks of subjective experience through dialogue with our evaluees and a willingness to consider reasonable acts of service may bring together our forensic and professional duties, forging a more dynamic, effective, and compassionate specialty.

Capitalizing upon potential opportunities to offer suicide postvention resources to survivors is consistent with such aspirational goals in forensic practice. The nature and extent of potential interventions will of course be dictated by the circumstances surrounding the expert’s engagement, but the provision of useful resources to support survivors, and acknowledging the risks associated with suicide loss, will be tenable across most scenarios. Readers are directed to the Uniting for Suicide Postvention website⁴⁸ for additional information and resources for suicide postvention.

CONCLUSIONS

The studies by Yip and colleagues^15,16 concluded that the exclusionary period in life insurance policy contracts served as a barrier to the incentive by those planning a suicide to purchase life insurance as a remedy to financial hardship. Accordingly, Yip et al¹⁶ argued for extending the exclusion period for as long as 3 years.

It appears possible, although a rare occurrence, that an individual, intending to benefit their family’s finances via planning suicide at the time of applying for life insurance, would then be capable of deferring taking their life for the period proscribed by a policy’s exclusionary clause, be it 1, 2, 3 years or longer. Suicidal ideation is often episodic, with quick onset and short duration.⁴⁷ Accordingly, it seems more likely that the exclusion may serve to mitigate an individual acting on a suicide plan arising due to financial strain occurring during the early year(s) of a policy, a hypothesis perhaps supported by the data from Yip and colleagues that suicides increased after the end of the exclusionary period. Thus, there is some support for the notion that the exclusion clause protects the insurer from undue loss due to premature death.

In contrast, exclusionary clauses present adverse consequences for families of loved ones who die by suicide. Suicides may end the pain of the individuals who take their life, but they visit great pain on the decedent’s survivors; and the loss of financial support should death benefits from life insurance not be paid out only compounds the pain and challenges of surviving for family members. Arguing that fraud by suicide “must be extremely rare,” a suggestion supported by the extrapolated data offered above, Barraclough and Shepherd¹⁴ proposed that life insurance companies universally should remove exclusion clauses from their policies. Given the presumed rarity of insurance fraud by those who die by suicide, removing the suicide exclusion clause in its entirety arguably represents the humanitarian option for life insurers to not unduly burden surviving family members. Alternatively, insurers could protect themselves against these few instances of alleged fraud by implementing either a small increase in all annual premiums so that the potential loss would be shared by the larger pool of insured individuals or by specifying that the exclusion clause applies only to policies above a threshold amount (eg, $1 million US), on the assumption that the possible collective financial loss incurred by the insurer from the aggregate of smaller policies’ benefits being paid to the beneficiaries of the decedent could readily be absorbed.

The dialectical opposition of these 2 perspectives, one to protect the insurer, the other to protect the bereaved, is not easily resolved. Research designed to better estimate the incidence of fraud would serve to define the length of a reasonable exclusion period designed to limit an insurer’s losses and correspondingly not potentially or significantly increase premiums paid by all policyholders. Given that the duration of exclusion currently in evidence within and among countries and companies varies so widely (Table 1), findings from such a study would also allow the industry to universally adopt a standard period of exclusion. If fraud, as suggested, is found to be rare, that period of exclusion in the event of suicide could be reasonably established at the shortest period of time for the benefit of all involved. Finally, forensic experts consulting on such matters should strive toward therapeutic assessment, recognizing these competing perspectives, and especially that of suicide loss survivors, to identify opportunities to promote thoughtful suicide postvention practices.