What is Suicide?
Suicide is defined as the intentional killing of oneself. Life insurance policies refer to suicide simply as “suicide,” or as “intentional self-destruction,” or “death by one’s own hand.”
What are Life Insurance Policy Suicide Clauses?
There are certain circumstances that may exclude nominee and legal heirs of policyholder from collecting policy proceed under the policy. One such exclusion is the suicide clause.
Policies issued Before 1st January’2014
Generally, there is a standard exclusion for claims on suicide in the first 12 months from date of commencement of a life insurance policy. With regards to policies issued before 1st January’2014, claims are paid on suicide too provided the suicide committed after one year of the commencement of the policy or from the date of revival of the policy.
LIC’s Suicide Claim Clause:
This Policy shall be void if the Life Assured commits suicide (whether sane or insane at the time) at any time on or after the date on which the risk under the Policy has commenced but before the expiry of one year from the date of commencement of risk under this Policy and the Corporation will not entertain any claim by virtue of this Policy except to the extent of a third party’s bonafide beneficial interest acquired in the Policy for valuable consideration of which notice has been given in writing to the branch where the Policy is being presently serviced (where the policy records are kept), at least one calendar month prior to death.
Private Life Suicide Claim Clause:
If the life assured commits suicide within one year from the date of commencement of risk or date of revival if revived, whether sane or insane at that time, the policy will be void and no claim will be payable.
Policies issued After 1st January’2014
But as per the new IRDA (Linked and Non-Linked Insurance Products) Regulations Regulations, 2013 (effective from 1st January’2014), in case of death due to suicide, within 12 months from the date of inception of the policy or from the date of revival of the policy –
- Non Linked Plans: the nominee shall be entitled to at least 80% of premium paid, the nominee of the policyholder shall be entitled to a minimum of the surrender value / policy account value, as available on the date of death.
- Linked Plans: the nominee shall be entitled to the fund value / policy account value, as available on the date of death.
Aegon Religare Life’s Suicide Claim Clause: If death occurs due to suicide within one year from the date of inception of the policy or within one year from the date of reinstatement of the policy, the nominee or beneficiary shall be entitled to 80% of the premiums paid, provided the policy is in force.
ICICI Pru’s Suicide Claim Clause:
If the Life Assured, whether sane or insane, commits suicide within one year from the date of issuance of the policy or from the date of policy revival, only the Fund Value, including Top- up Fund Value, if any, as available on the date of death, would be payable. No charges will be deducted after the date of death.
If the Life Assured, whether sane or insane, commits suicide within one year from the effective date of increase in Sum Assured, then the amount of increase shall not be considered in the calculation of the death benefit.
Things to Note
- The Death Benefit, if payable during the grace period, will be reduced by the outstanding policy premium.
- In case of assigned policies favouring financial institution, the claim would be admissible to the extent of the consideration amount of the loan or actual sum assured which ever is less, provided such notice of assignment was given.
- The suicide clause is not applied in Group Life Insurance policies.