In 2016, Aubrey McClendon, co-founder of Chesapeake Energy and CEO of American Energy Partners in Oklahoma City, was killed in a fiery car accident. The circumstances surrounding this accident raised a few eyebrows, since it occurred just one day after he had been indicted on bid-rigging charges by a federal grand jury. McClendon maintained his innocence, stating that the charges were “wrong and unprecedented,” but just a few hours later he veered off a country road and into a concrete wall.
Though there was no apparent reason that his SUV should have plowed into the wall at 78 mph, the medical examiner determined that his death was accidental. Many people thought that this ruling was made as a favor to his family so that they could collect on his life insurance policy. This belief, however, was based on a widely held misconception that all life insurance policies are considered null and void in the event of a suicide. The truth is, suicide life insurance does exist and nearly all policies will cover it after an initial waiting period.
To best understand how cases of suicide are handled by insurance companies, you should first become familiar with life insurance waiting periods. These are put in place by insurance companies to reduce the risk of losses due to insurance fraud.
If you lie when completing your life insurance application and your insurance company becomes aware of this for any reason during the initial waiting period (typically two years), your insurer has the right to void your policy. If you smoke but took out your policy as a non-smoker, or if you have a serious or terminal illness and failed to disclose that when you applied for coverage, your beneficiaries may be left without coverage if either of those things kills you during the life insurance waiting period.
The act of suicide is included in this life insurance waiting period as well. In this case, the terms are laid out according to your policy’s suicide clause, which we will go into greater detail about shortly. For this reason, your life insurance company may expect you to disclose information about depression or other mental health issues for which you have been diagnosed in the past if they may result in you engaging in reckless or self-harming behavior.
Most people assume that the suicide clause is something that simply states that policies will not pay out death benefits in the event of a suicide. That is, however, only loosely based in fact. All policies have a suicide clause of some sort written into their terms and conditions.
This clause states that coverage will be denied if the policy holder commits suicide within a given time period from the policy issue date. In most cases, this is two years, but some policies may only require a one-year period, while others may have longer times. In the event that a suicide occurs during the waiting period, the insurance company will typically return all premiums paid to the beneficiaries, and nothing more.
Hollywood has produced several movies that depict insurance companies as bad guys who will do anything in their power to avoid paying out a claim. While this makes for great entertainment, it is rarely grounded in reality—particularly when it comes to life insurance payouts. In nearly all cases, the determination of whether a suspicious death is deemed a suicide or an accident is up to the medical examiner and local law enforcement. Insurance adjusters are rarely sent out to investigate these claims.
That is not to say it never happens. If a loved one dies before their life insurance waiting period has expired and the circumstances seem suspicious, the insurance company may refuse to pay out benefits pending a deeper investigation. In this case, family members may need to seek legal help to fight the claim denial. These situations are usually settled out of court, though family members may have to accept a sum much lower than what they expected to collect.
Aubrey McClendon’s policy was well past the life insurance suicide waiting period, so it would have been paid out regardless of the medical examiner’s findings. However, had that not been true, the insurance company might have contested the ruling that it was accidental. While this ruling was based on the fact that there was no suicide note and evidence that McClendon did apply the brakes before hitting the wall, the circumstances led many to believe it was an intentional accident. In this case, it would be up to the insurance company to prove it was a suicide, not the family’s responsibility to prove otherwise.
Some people ask their insurance agent if it is possible to get life insurance with no waiting period before full death benefits are available. While there are policies that bill themselves as no waiting period life insurance policies, this usually refers to policies that can go into effect immediately, without the need for a medical exam or test results to come in. Even these policies, however, have conditional and suicide riders that allow the insurer to deny coverage for non-disclosure of health-related issues and self-inflicted deaths within a certain time frame of opening the policy.
Bear in mind that the suicide life insurance waiting period is beneficial to both the policyholder and the insurance company. Someone who is considering suicide but wants to make sure their family is well cared for may take out a large life insurance policy. Because of the rider, they would need to wait two years before taking any drastic measures. Hopefully, this is a long enough for their fortunes to turn around and for them to get the help they need for their feelings of despair.
Things can be difficult enough in the aftermath of a loved one’s suicide. Laboring under the belief that you no longer qualify to receive life insurance benefits will only make things more stressful. Depending on how long ago the life insurance policy was purchased, you may still be able to collect compensation. Of course, the fine print in insurance policies can often be difficult to decipher. When you purchase your coverage through an independent insurance agent, you and your family will have someone to turn to for answers to your insurance-related questions. Let a local Trusted Choice® independent agent guide you when you are purchasing life insurance or any other type of coverage.
Also, if you or someone you love are having thoughts of suicide, please know that help is available. We encourage you to reach out to loved ones, your doctor, or a therapist. You can also call the National Suicide Prevention Hotline at 1-800-273-8255 to speak with someone immediately. You are not alone.