Suicide Clause in Life Insurance

Definition: The suicide clause is a standard feature in most life insurance policies. It states that if the policyholder dies by suicide within a specific period, the insurance company will not pay the death benefit. Life insurance policies usually don't pay the death benefit for suicide that occurs within the first year of the policy.

Definition: The suicide clause is a standard feature in most life insurance policies....

Term Life Insurance that Welcomes Change

Life Cover Starting @ just ₹18/day*

Change Your Policy Term

As per your life stage and commitments

Hassle-Free Claim Settlement

99.38% Claim settlement ratio*

Smart Income Tax Savings

Save up to ₹54,600* on your taxes

ARN: L0088 | *T&Cs Apply

What is Suicide Clause in Life Insurance?

Life insurance provides financial protection to your loved ones in case something happens to you. But what happens if the policyholder dies by suicide? This is where the suicide clause comes in. Knowing the suicide clause in your policy is important. It helps make sure your family gets the right help when they need it the most, and there are no surprises during a tough time.

Key Takeaways

The suicide clause is a common clause in life insurance policies.
It applies for a limited time (first 12 months) from the date the policy is issued or revived.
After the exclusion period ends, death by suicide is treated like any other claim, which means the full sum assured is paid to the nominee.

How the Suicide Clause Works in Life Insurance

When you buy a life insurance policy, the insurer agrees to pay a sum assured to your beneficiaries in case of your death. However, during the initial period of the policy, called the exclusion period, certain causes of death may not be covered. Suicide is one of them.

How it typically works:

New policies

If a person buys a new life insurance policy and dies by suicide within the first year of the policy, no death benefit is paid. In such cases, the nominee may receive only the total premiums paid (extra premiums paid including), possibly after deductions like medical underwriting costs, if applicable. Since this can vary from one policy to another, it is important to carefully check the details before purchasing a life insurance plan.

Policy revival

If a lapsed or expired policy is revived and the insured person dies by suicide within 12 months of revival, the suicide clause may again apply. In this case, the exclusion period resets from the revival date.

Real-Life Example Scenario

Rohan, a 30-year-old IT professional, buys a ₹50 lakh term life insurance policy in January 2023. In November 2023, just 11 months after the policy started, Rohan died by suicide.

His nominee files a claim with the insurance company. Since the death occurred within the 12-month exclusion period, the insurer does not pay the ₹50 lakhs death benefit. However, they refund all premiums paid until that date, after deducting applicable charges.

Why It’s Important to Understand the Suicide Clause in Life Insurance

Understanding the suicide clause is important for both policyholders and their families.

It sets realistic expectations

Families may assume that all types of deaths are covered from day one. Knowing about the suicide clause helps set accurate expectations and avoid confusion during already difficult times.

Creates mental health awareness

Suicide remains a sensitive topic, but awareness around mental health is growing. Financial stress or mental health conditions can lead people to consider extreme measures. The suicide clause serves as a legal and ethical safeguard to ensure that claims are handled fairly.

Protects insurers from moral hazard

The clause helps prevent cases where someone may buy a large policy with the intention of harming themselves shortly afterwards to provide financial security to their family. This helps insurance companies manage risk and maintain sustainability.

Policy revival implications

Many people are unaware that the suicide clause resets upon policy revival. If your policy lapses due to non-payment and you revive it later, you may be subject to another exclusion period. This can have serious consequences for your loved ones, who may be left without the financial support.

Regulated by the IRDAI

As per IRDAI guidelines, if the insured person dies by suicide within 12 months of policy commencement or revival, the insurer is required to refund of the premiums paid (excluding taxes and rider premiums), depending on the type of policy. This helps keep things transparent and ensures all insurers follow a standard approach when handling such sensitive claims.

Conclusion

The suicide clause is a critical, if rarely discussed, aspect of life insurance policies. It’s not just a legal formality; it's there to protect both the policyholder and the insurance company from financial and ethical risks. If you’re buying a policy or have recently bought one, make sure to read your policy document carefully, and understand what will happen if your policy lapses and is revived.

Life insurance is a long-term commitment. Knowing the fine print, including clauses like this, ensures you and your loved ones are truly protected.

Frequently Asked Questions

Does life insurance cover death by suicide?

Yes, but only after a specific waiting period known as the suicide exclusion period, which is 12 months from the date the policy starts or is revived.

Do all life insurance plans have this clause?

Yes. The suicide clause generally applies to all types of life insurance policies, including term plans, whole life, and ULIPs.

If someone passes away by suicide during the exclusion period, do you get the entire premium amount or are there any deductions?

In most cases, nominees receive a refund of the total premiums paid, but after certain deductions. These deductions may include GST, administrative charges, rider premiums (if any), and underwriting costs.

Will a suicide claim be investigated or challenged?

Yes. In cases of suspected suicide, insurance companies may investigate the circumstances of death before approving or rejecting a claim.

Do you get the sum insured if the person dies within the exclusion period?

No. In most cases, the insurer will refund the premiums paid (minus applicable charges), but not the full sum assured.

Written by Neviya Laishram

1.7K Linkedin Followers

Reviewed by Vaibhav Kumar Kaushik

A senior editor with years of expertise, she fine-tunes content that connects, converts, and builds trust. She transforms heavy life insurance concepts into clear, aha-moment reads. Writing is her passion, and thinking ahead is second nature. When not wrangling words, she’s crushing game levels because every challenge is a puzzle waiting to be solved.