Will the nominee get the sum insured if the policyholder commits suicide?

K. ARAVIND

The life insurance policy is taken out to ensure the financial security of the family members after the death of the policyholder. But if the policyholder commits suicide, will the nominee get sum assured? Coverage for unforeseen events in life is covered by insurance. Can suicide be covered by a life insurance policy when suicide cannot be considered an indefinite event?

The insurance company decides whether to provide coverage for suicide based on the period after taking out the policy. Normally 12 months after taking out the policy, in case of suicide, the nominee will get the insurance amount. At the same time it is necessary to check what is written in the policy document regarding suicide coverage.

The condition is that the nominee will not receive any sum assured if he commits suicide within 12 months of taking the policy to avoid the risk for insurance companies. This is to avoid any liability on the part of the insurance company in the event of a person taking out a policy and committing suicide by setting himself on fire.

Policies purchased after 2014 stipulate that if the policyholder commits suicide within 12 months, 80 per cent of the premium paid till then or Surrender Value, whichever is higher, will be paid to the nominee. At the same time, in the case of policies purchased before 2014, if the policyholder commits suicide within 12 months, no amount will be paid. In such cases, the refund amount will be based on the fund value of the unit linked policies.

Suicide coverage is available after 12 months on almost all life insurance policies. This applies to various life insurance policies such as term insurance, ULIP and endowment policies.

The 12-month rule is applicable if the policy which had once lapsed is reactivated by paying the required premium amount. That is, coverage will not be available if the policyholder commits suicide within 12 months of reactivating the lapsed policy. If the policyholder has given any false information to the insurance company at the time of taking the policy, it may result in cancellation of the claim.

Some companies offer group life insurance coverage to employees. Suicide is not covered by group life insurance. This is because the term of such policies is one year. Coverage is not available on such policies as suicide coverage is available only after one year of taking out the policy.