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Do life insurance companies disburse the sum assured in the event of suicide?

Here's your answer:

Life insurance companies will only disburse up to 80% of premium paid if the policyholder commits suicide within 12 months of buying the policy. If the policyholder commits suicide after 12 months of purchasing the policy, the nominee may be eligible to receive the entire sum assured, subject to the terms and conditions of the insurance company.

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Do life insurance companies pay for suicidal death in India?

A person opting for a life insurance policy may have this question in their mind. The answer to this question is “It Depends.” A life insurance company may or may not disburse the sum assured to the nominee in the event that the policyholder commits suicide.

We need to go deeper and understand the fine-print of a life insurance policy to get an accurate answer. Let’s begin to unravel the answer.

Cases where the nominee will get claim amount

If a policyholder has purchased a life insurance policy post Jan 1st 2014 and committed suicide within 12 months of policy purchase, the nominee will only be eligible to receive 80% of the premium amount.

The pre-decided sum assured will not be paid to the nominee, only 80% of the premium amount paid by the policyholder will be disbursed.

What happens if a policyholder commits suicide after 12 months of purchasing policy?

If a policyholder commits suicide after 12 months of policy inception, the nominee will be eligible to receive the death benefit. The 12 month waiting period is implemented to decrease the risk of moral hazard.

That being said, it is important to check the fine-print and terms & conditions pertaining to suicidal death in your life insurance policy bond.

Different insurance companies have different terms & conditions related claims arising due to suicidal death.

Cases where the nominee will not get claim amount

There are certain situations where the nominee will not get the sum assured even if the policyholder has committed suicide after 12 months of policy inception. Let us talk about some of these situations below.

  • Claim will not be disbursed to the nominee if the policy has been lapsed. A lapsed policy cannot be revived if the policyholder has passed away.
  • The claim may be rejected if the policyholder commits any falsification and violates the principles of insurance.
  • The claim may be rejected if the policyholder is covered under a group life insurance plan (Under his employer) and commits suicide.

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Frequently asked questions

  • What should I read within my policy bond to find out about terms related to suicide?

    All life insurance companies have a "Suicide Clause", as advised by the IRDA. You should look for the Suicide Clause within your policy bond and read it carefully.

  • Are term insurance and life insurance suicide clauses the same?

    Yes, term insurance and life insurance suicide clauses are generally very similar in nature.

  • What is the amount a nominee will receive if the policyholder commits suicide within 12 months of policy inception?

    Up to 80% of premium paid only.

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