You might be wondering, “Can I get life insurance if I have a terminal illness or commit suicide?” Hopefully, you don't commit suicide or have or come down with a terminal illness. But the straightforward answer is it depends.
Unfortunately, during the lockdown period to fight the coronavirus, I've seen interest in life insurance and suicide tick up. Tens of millions of Americans have lost their jobs due to the lockdowns. Businesses are going under. And in general, there's this hopelessness in the air.
I've got life insurance to help eliminate all my mortgage debt and provide a financial cushion to my loved ones if I were to prematurely pass. With two kids and a wife to take care of now, it would be irresponsible for me not to get life insurance.
However, what about getting life insurance if you have a terminal illness or whether you're contemplating committing suicide?
Terminal Illness, Suicide, And Life Insurance
To answer the question, “Can I get life insurance if I have a terminal illness or plan to commit suicide,” I've asked the CEO of PolicyGenius, Francois de Lame. Francois and I met up in NYC a years ago and have stayed in touch.
PolicyGenius is a leading insurance marketplace where consumers with one application can easily compare life insurance quotes from many life insurance providers. Instead of applying to each life insurance carrier one by one, it's much better to apply in a central location and have qualified carriers compete for your business.
Sam: What if you commit suicide after you take out a life insurance policy? Will your policy pay out?
Francois: If you commit suicide within the first two years of holding a life insurance policy, the death benefit is not paid out. Only the premiums paid on the policy would be paid out to your beneficiaries. After two years, unless specifically excluded by the policy, the life insurance company will pay out the death benefit for a suicide.
Sam: What if you have a non-terminal illness or condition, can you still get life insurance? What if you feel you have an illness but don't tell the life insurance company how you're feeling?
Francois: If you have an illness or condition, you could still get life insurance, but it would be at a higher cost than if you were in perfect health. Life insurance companies will have you take a medical exam, ask you detailed questions about your health history, check databases to see if you’ve had any prescriptions filled that could indicate illness and may also request medical records as part of underwriting – including talking to your physicians. So there's a high likelihood that if you don't tell, they'll find out.
Also, if they don't find out about your illness and they give you coverage, but you die from that illness within the first two years of the policy being active, carriers can request/require an autopsy and choose not to pay if it's determined you knew about a condition and withheld that information for the purpose of deceiving the life insurance company to get a better rate. But in that case, the premiums paid in would be refunded to your beneficiaries.
Sam: What if you have a terminal illness. Can you still get life insurance?
Francois: If you have a terminal illness, you would not qualify for regular life insurance. You might be able to get an accident-only policy (that only pays out if you die from an accidental cause of death) or maybe an expensive guaranteed-issue policy for a low amount.
The key is to get life insurance before you get sick. Here are all the life insurance options to consider. Some include final expense insurance a simplified issue life insurance that can help if you don't qualify for the traditional term life insurance or a type of permanent life insurance policy.
Sam: Let's say you buy life insurance today without an illness and then develop a terminal illness within two years unknowingly or after two years – what happens?
Francois: If the developed illness was not something that the insured was aware of, or had sought treatment for, then there shouldn’t be a contestable claim—either within the two year period, or after.
The carrier will likely investigate the situation, if within the two year contestability period, but as long as there wasn’t something that wasn’t disclosed on the app/exam/underwriting process, then there shouldn’t be an issue. If there was info that wasn’t disclosed, that led to the death, then the carrier would have a legitimate right to contest the claim.
Two Years Is Key For Those Who Get A Terminal Illness Or Commit Suicide
The key takeaway from this post is to not commit suicide or die within two years from an illness after you take out a life insurance policy. Otherwise, your life insurance policy probably won't pay out to your beneficiaries.
If you are feeling suicidal, please reach out to friends or loved ones for support. If they aren't there for you, please call the 24/7 suicide hotline at 1 (800) 273-8255. Really talk to someone who can provide you love and support.
It's important to know the rules when taking out any insurance policy. You might think you are covered for X, but you might only be covered for Y.
Nobody knows your health more than you. I've spoken to many doctor friends who admitted that diagnosing illnesses and treating conditions are often highly subjective. Even if someone tells you you have a terminal illness, nobody really knows until you're dead. Therefore, if you have dependents and aren't feeling too healthy, all the more reason to get life insurance.
Thanks again to Francois from PolicyGenius for answering my questions! PolicyGenius is a great platform to find the cheapest and best term life insurance for you all in one place.
Updated for 2021 and beyond
I think this fits in well with yours overall message on preparing financially for death so that one’s family doesn’t have to take care of it.
I have close acquaintances who have had to deal with the passing of a loved one, and also had to suffer through sorting out their loved one’s estate.
Much better to take care of everything in advance so that your family doesn’t have to suffer later.
Morbid Shmorbid. People need to toughen up. Death is certain. How we get there is not. Mitigating that risk for the benefit of those you leave behind is CHEAP. For those of us who have seen the untimely death of a family member, we can speak to being prepared or not.
Also, as laws begin to change regarding assisted suicide, vs. long term disability and chronic disease, it’s important to understand these policy clauses and laws. Sitting here whole and well on a Friday, feeling fine – it’s easy to dismiss Sam’s article. However, consider yourself suffering from Lou Gehrig’s, as your body slowly betrays you – your opinion might change. Life can be harsh! Be prepared.
Another interesting tidbit, the two year rule can vary by state. For instance, in Colorado it is only one year.
Good to know! Everybody who takes out life insurance should ask about the payout parameters.
Good reminder on life insurance. I will hit the 2 year mark this July, and kept an eye on the suicide clause. Not because I had anything in mind, but it is important since insurance companies could twist a death situation into suicide to avoid payout… ex: death in a car accident could be proven as suicide by some good lawyers (?).
Yeah, who knows. I’ve read too many stories about insurance companies NOT paying out due to whatever reason. The consumer is really at a disadvantage.
Insurance companies are big. Their clients are small. It’s the same thing as engineering your layoff. The employee versus the corporation.
Definitely a morbid topic. There’s not much I can add to the conversation other to reiterate that a payout is likely to be contested by the insurance company. As for suicides, I would see if your policy has a rider that allows for payouts if you commit suicide, but do I really have tell everybody to NOT do that? Trust me, offing yourself isn’t helping anybody.
Outside of that, this was a pretty good refresher course on the two year rule.
Sincerely,
ARB–Angry Retail Banker
Hey Sam,
At the moment we have enough life insurance to buy a house if I were to pass away.
Would it be pointless to have funeral insurance AND life insurance for someone older? Most people would be okay with just life insurance right?
What insurances do you have?
Tristan
I have a 20 year term life insurance policy, so I can’t buy a house with it.
Sounds like you have a lot of value in your whole life policy? We just learned that funerals can cost $20,000 from the Checklist For Death post. I would think funeral insurance is redundant.
Sam, a little confused here. To me, life insurance is to make sure your dependent’s are covered in the case it would be a financial crisis for them to lose your income (in additional to the obvious emotional crisis). Once your net worth is such (excluding primary home) that they would be fine financially if you passed unexpectedly then what’s the point?… to make them better off without you?. I know the answer is surely No but based on what you have shared re: your situation I would pose you are now “self insured” for life insurance purposes. Your heirs will be just fine financially and therefore I say the premiums are a waste of money that could be better deployed elsewhere. Am I wrong?
That’s a fair reason to have life insurance for you.
For me, life insurance is about providing an income/asset source to replace mine when I’m gone, and then some to help make up for extra pain caused. I’m refinancing my mortgage, for example. If my dependents lost me and 100% of my income, they may be forced to sell the house because they can no longer afford to carry the ~$4,000/month mortgage.
Life insurance helps minimize more disruption than necessary.
And finally, if I’m dying prematurely, I’m losing and so is my family. Life insurance in my mind, makes losing a little less painful. To put it to an extreme, let’s say I have a $100M life insurance policy that pays out to nourish all starving families in San Francisco for the rest of their lives. I would die less distraught knowing that other people are being helped. My death would have a positive purpose. So in a very real way, getting life insurance is a self-less or thoughtful act to help others.
ok, I guess, I understand your logic and I believe you get mine. Yours does not convince me personally and mine clearly does not you. If you haven’t done a post on disability insurance yet I suggest you do. Oddly, people are far more likely to have life insurance than disability insurance even though we are far more likely to be disabled prematurely than die prematurely. Plus being disabled (without insurance) has a far more negative effect on the family financially than dying… because you cost money in addition to not providing it anymore. If you can only afford to purchase one, I recommend Long Term Disability insurance over STD or Life.
keep up the good work!
I grasp what point you’re trying to make; that once you have a high enough net worth, then you have enough money to leave behind that you don’t need a life insurance policy.
I still think if you can afford one, you should go for it. Most people’s high net worths are tied up in illiquid assets such as their home or–guess what?–life insurance policies. So without that insurance, there might be less money to be inherited than you think. Plus, premiums are cheap compared to the payout your family would receive.
Self-insuring also poses a temptation problem. That money is now there and can be used for purposes other than leaving to your loved ones after your death. Even as an emergency fund (certainly not the most irresponsible thing you could do, sure), people put money into accounts designated for passing onto loved ones and then withdraw it when something needs repairing or replacing. The justification is always “I’ll put it back later”, but that likely won’t happen. You’re now playing catch up. Plus, why put money into an account where your loved ones only get that amount when you die? For fairly similar and small amounts, your family can be covered by far more money then you put in.
Life insurance payouts are also incontestable, to my knowledge. If you were to leave everything behind in a will, other family members can come out of the woodwork for a piece of the pie, all with claims of how the people you intended to leave everything to were bad to you and mistreated you and didn’t love you enough. Wills go through probate; they are contestable in probate court and there is a possibility that people other than your intended beneficiaries can end up with your money and assets. Probate takes a long time, and the courts and lawyers are usually the winners in the end. Life insurance payouts bypass that and go right to your intended beneficiaries.
I do agree with you on the importance of disability insurance. And even moreso, long term care insurance. I don’t even want to think about how many people assume that senior assisted living facilities and hospices are covered under health insurance. They are not.
Sincerely,
ARB–Angry Retail Banker
Just a side note regarding something you said: You still can contest life insurance beneficiary designations, at least in California (and in many other states). It’s a cause of action called Intentional Interference with Expectation of Inheritance. New in California as of about 2014, but it came into being in several other states prior to that.
It’s kind of a catch-all for people who unduly influence the policy owner to designate someone else as beneficiary other than their intended person. And before anyone starts thinking that it sounds like just a new way for lawyers to make money, let me tell you that I took on one of those cases for the kids of a man who passed away, after his new wife of less than one year logged on to his company intranet and designated herself as the 100% beneficiary of all of his company retirement/pension plans. Fortunately for us, he had told several of his lifelong friends that he left money for the kids in those benefit plans. We were able to prove she stole the money without his consent, and the court awarded the kids the amount their dad intended to leave them, plus punitive damages.
Wills, trusts, all of that are still contestable after the decedent’s death. There has to be at least some meat to the case, though, or it usually gets thrown out pretty quickly.
I would like to suggest a different, more broad takeaway: Get life insurance! Yesterday!!!
For the cost of a mediocre XL pizza, you can protect your family in the event of your untimely death. I sleep a lot better at night knowing that Mrs. Superhero will only be sad, not sad and financially struggling, if I die too young.
The only time you shouldn’t pay for a simple term life policy is if you are self-insured due to a very large nest egg. Even then, you should probably pay the $20-30 per month to insure yourself anyway.
Does policy genius provide quotes for joint term life insurance? My wife and I fairly close earnings wise and we just had a kid. We each have life insurance through work but looking to get policy outside of work. Would joint term make sense?
I’ve never heard of joint term life insurance, but it’s a great idea. My wife and I have the same issue. If we each insure enough to cover the other if one of us dies, then if both of us die, there’s too much benefit.
I want to look into this more.
Thanks.
I have no problem discussing such a topic, and believe anyone with dependents should get appropriate coverage. Even If you don’t but think you will have dependents you may want to get it lest you be uninsurable.
It’s why I have a combination of term and whole life. I’ll know when I die my family will be safely covered, even if it is more than 30 years, from now. I’ll always have insurance in place.
I don’t know if I could die peacefully knowing that my family WASN’T taken care of w/ a life insurance policy. I’m imagining coming back as a haunted ghost full of regret b/c I failed to be financially responsible to my dependents.
The key point of this post is to KNOW THE TERMS. We often think we have one thing but we have another.
Yet another reason to get your life insurance in order now. I’d forgotten about the 2 year trial period of life insurance coverage.
Time to make the call.
Call or check online. Let us know what kind of quotes you get for various amounts if you get a chance.
Jack, I hope you aren’t making the call because you want to start the clock on two years. I am sure your loved ones would much prefer having you around than an insurance check. Please reach out to someone if you are having a hard time.
That goes for you too Sam. I hope you aren’t writing about this topic because it has been on your mind lately. Working really hard like you did for years in the finance industry can wreck your emotional health. Nationwide, 6% of the nation suffers from alcoholism but 20% of lawyers are alcoholics. If you’ve pushed yourself too hard for too long, you need to take some time to take care of yourself.
This very topic involved a college friend, last year. For a couple of decades, he was quite successful in mortgage lending (a star at Countrywide). His earning ability slowed down with the economy, and (like most sales jobs) his employers were always looking to cut compensation once the business was locked in. He had a high-profile lifestyle that just kept on going, his finances hit a tipping point, and he ended his life.
He left a note telling his wife that Life Insurance would pay out $2 million because he held it longer than two years. Two children in college. Ugh. I’m sure there is more to the story, but all I need to know is that he was one of millions of people who are hurting and desperate and made an irreversible ‘business decision.’
Very sad to hear about your college friend. It’s hard to really help people if we don’t actively try and observe their behavior and stay in touch. At least he did his research and knew the rules for the sake of his family.
Hmm.. Thanks for the info. I didn’t know about suicide.
How about if you have a pilot license. I heard that it’s really hard to get life insurance if you got one.
I think some policies may have an exclusion if you have an accident while piloting a personal aircraft but you can get a separate policy to cover yourself while flying for a reasonable amount of money. I think this exclusion may be there regardless if you have a pilot’s license or not.
What timing – a friend and I were actually just talking life insurance policies the other day and he joked that his wife would be in good shape if he offed himself. I told him tough luck – I think there’s something in the policies that won’t pay out for suicide but I wasn’t positive. So I guess I can now let him know? :-)
— Jim
Sometimes, all we can do is joke about this topic. It’s always good to know the rules. This is one of the key takeaways from the post. Know what you’re paying for!
Yeah, I know when we got our policies a few years back, I looked at the suicide clause, not that I was planning anything but just because I’d heard of the ‘no payouts at all’ thing, and was curious. I think for our policy it was one year.
Interesting. I thought life insurance didn’t pay out for suicides at all. Not sure this is a good message to send to people: wait two years to commit suicide. But I guess it’s good to know the terms of any plan.
I need to get my life insurance figured out, i have been putting it off way to long.
I did not know about the two year rule, and while it is a morbid topic that is good information (not planning on dying but getting the 2 year clock started sooner than later seems wise)
The title of this post was a hard one to read. A close friend committed suicide last week following a bout of hard times. The final straw was losing his job. My friend didn’t tell anyone he lost his job for months. He was ashamed and got himself into a load of debt. By the time friends or family knew what happened he had already decided he was a failure. This guy had many friends who would have done anything to help him. He leaves two kids. If someone is thinking about committing suicide, call the many people who care about you and try to talk through alternatives.
I’m really sorry about your friend. :(
Sorry about your friend. Maybe this post will remind us to reach out to friends we haven’t kept in touch with in a while and just check in to see that all is OK.
Despite social media and the internet, it’s still as easy as ever to grow apart. I spoke to my friend whom I haven’t spoken to for 10 months just last week. It was nice to catch up.
Sorry to hear about that, man.
Sincerely,
ARB–Angry Retail Banker
Hmmm… takeaway seems suspect on this one.
It’s never a bad idea to know the terms of insurance or any contract. There is IMPERFECT information out there between companies and their HUGE disclosure packages, and consumers who naively think they are covered for X, but are only covered for Y.
Know the rules/terms helps prevent anguish when the time comes. If you have suggestions, I’d love to hear them or why you disagree.
Morbid topic indeed, yet planning financial planning for after we leave this earth is important for our loved ones. Having not only everything in line, but also thought through is a huge burden off their back. And I suppose the two year rule is a good one to remember.