When it comes to life insurance and suicide, where do you stand? Here’s everything you need to know about suicide and your life insurance policy.

Will my life insurance pay out if I commit suicide?

Whether or not your beneficiaries will receive a payout after you have committed suicide will depend on your life insurance provider’s suicide exclusions, and whether or not you have contravened any rules they may have surrounding life insurance.

The reality is that almost all insurers in South Africa will have an exclusion (or set of rules) regarding suicide and life insurance payouts so beneficiaries may have the right to a claim, depending on the circumstances and timeline surrounding suicide.

What are exclusions?

All insurers will have a set of exclusions on their life insurance policy documents. This means that there are certain instances in which a claim will not be paid. They differ from insurer to insurer but will be clearly stated on your policy document.

These exclusions are varied. They could state, for instance, that you’re not covered if you are killed when you’re participating in illegal activities. It could be that one insurer won’t pay out if you die in a parachuting accident. 

There will also be a suicide exclusion, the terms of which are up to the insurer. Typically, most life insurance policies will state that your life cover won’t pay out if you commit suicide within a certain time after taking the policy. This period is normally two years, but this period is up to the individual insurer.

Why is the suicide exclusion there?

Simply put, the suicide exclusion is there to ensure that people don’t ‘cheat the system.’

Without suicide exclusions, it would be easy for policyholders to take out life cover for millions of rands before committing suicide, leaving the insurer to pay out a large lump sum having only collected one premium.

Does the suicide exclusion ever get reinstated?

If your policy states that the suicide exclusion is a two-year period, then if the policyholder commits suicide after two years the insurer would pay out.

However, there are instances in which the two-year period would ‘start over:’

• If you lapse your policy by not paying premiums. This is considered a breach of contract and when you start paying premiums again, the two-year period will likely start anew as the contract is viewed as a fresh one
• If you switch life insurance providers, then it’s likely that your new insurer will impose another suicide exclusion upon you
• If you increase your cover then the exclusion may apply to the difference between the amounts. For example, if after two years you increase your cover from 1 million to 1.5 million, the suicide exclusion may apply to the extra R500 000.