On a dark winter evening, while rushing home after a hectic day in office, I received a hassled call from my little daughter who, on the other side of the phone said, “ Mummy my friend Mansi’s father has died.”  I was surprised no end but did not have the courage to talk further. I questioned myself, how can a healthy man like Chetan die so unexpectedly. Accident, heart attack, what? Various thoughts crossed my mind. I rushed home to be with my daughter who was very upset with this news. But whisperings in the building brought forth a different revelation. He had committed suicide.

With this sudden development his wife and daughter had moved to Ahmedabad.

By sheer chance, I bumped with mother – daughter duo in a Mall during my recent trip to Ahmedabad. Our joy knew no bounds. After exchanging pleasantries, she told me that she was in dire straits for few years as husband left practically no fortune and she did not even get the insurance claim. I got particularly anxious about the second part. I questioned myself – Why was the claim denied? Suicide is after all death and it is beneficiary’s legal right to have it. But this is not the case.   

 So is ‘Suicide’ an exclusion? Yes & No!

One must remember that life insurance isn't designed to cover the taking of one's own life. Insurance policies will not pay if the insured commits suicide within a year after the policy issue date. After that the proceeds will be paid for suicide. The reason for this is that most people who wish to commit suicide will not wait for the entire years to do so. Furthermore, insurance in general is intended to cover fortuitous (accidental) events. Since suicide is not accidental, it is excluded from the scope of coverage, at least for a stated period of time. In Chetan’s case his policy was just 5 months old. The reason was clear.

This way we see that death claims are not payable under certain circumstances in case of life insurance. Although life insurance policies are taken in order to ensure that the nominee receives the sum assured (and other benefits, such as riders, bonuses etc.) on the death of the insured, there are quite a number of typical circumstances in which death claims are not payable.

As mentioned above, if the insured, whether sane or insane, commits suicide within 12 months from the date of issue of the policy or the date of any reinstatement of the policy.
Let's assume that an individual's policy had lapsed due to premium non-payment. He makes up the payment backlog to bring the policy back in force. Two months later, he commits suicide. The insurer will not be liable to pay the death claim to the nominee.
If the insured has misrepresented facts, usually pertaining to health conditions, at the time of entering the insurance contract.

However, an incontestable period (usually 12 months after the policy has been in force) is imposed. That is, once the policy has been in force for this period, the insurance company cannot nullify or void a policy on the basis that the policy holder had made any misrepresentation or omission, usually pertaining to health conditions, at the time of entering into the insurance contract. The incontestable period clause does not affect the rights of the company in case there is any fraud involved. The onus of proving fraud lies on the insurance company. In such cases, the only one to lose out would be the nominee/family of the insured who would be dragged through unnecessary complications at a time when they need all the calm and peace they can get.

A misstatement of age clause is inserted by the company to protect itself against the insured wrongly stating her/his age. This doesn't void the policy, however. It still remains valid. In the event of the insured's death during the term of the policy, the death benefit is adjusted as per the actual age of the insured.

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