Life insurance is a financial tool designed to provide a safety net for loved ones in the event of the policyholder’s death. However, when it comes to suicide, a complex set of considerations and regulations come into play.
Key takeaways
- Policies issued before January 1, 2014, state that if the insured commits suicide within 12 months, the policy becomes void, and a claim will not be accepted.
- For a market-linked life insurance suicide clause, if the insured commits suicide within one year from the issue of the plan, the nominees will receive the policy’s total value.
- In a traditional life insurance plan, nominees will receive 80% of the premium paid for death due to suicide within one year from the start of the policy.
- When a policyholder undertakes a loan on the policy and dies due to suicide during the policy term, the policy amount goes to the lender.
If you want to find out that a life insurance clause covers suicide in India, you need to understand the life insurance suicide clause in policies issued before and after January 1, 2014.
Life Insurance Plans Issued Before January 1, 2014
According to the life insurance suicide clause policies issued before January 1, 2014, it is stated that if the insured commits suicide within 12 months from the start of the policy or the date of revival, the policy becomes void, and a claim will not be accepted. Hence, no claim will be entertained when an insured commits suicide before the policy completes one year. If the insured commits suicide after 12 months of the policy issue, the family will receive a death benefit.
Life Insurance Plans issued after January 1, 2014
In the case of the policies issued after January 1, 2014, there is a change in the suicide clause. For a market-linked life insurance suicide clause, if the insured commits suicide within one year from the issue of the plan, the nominees will receive the policy’s total value. For traditional life insurance plans, nominees will receive 80% of the premium paid for death due to suicide within one year from the start of the policy.
Third-Party
When a policyholder undertakes a loan on the policy and dies due to suicide during the policy term, the interest of the lender, a bank, or a financial institution will remain protected by repaying the loan. However, the insurer must acknowledge receiving the notice of this policy assignment 30 days before the death for it to be effective, so bear that in mind.
Group Insurance Policy
In the case of a group suicide clause life insurance, the policyholder or the employer owns the policy and not the employees covered in it. Hence, a claim is not accepted in case of death because of suicide.
Points to Remember
In case of any incorrect information provided to the company, the policy remains cancelled. In case of a claim due to suicide during the grace period, the sum assured will be paid after the deduction of the outstanding premium payable. In case of a lapsed policy renewal, the claim is rejected if the insured commits suicide within one year of the issue.
Now that your question, does life insurance pay for suicidal death in India, is answered, you need to be aware that suicide is a cowardly act and only puts your loved ones into trouble. Getting an insurance company to pay for a claim in case of suicide is very tedious and challenging.
