Most people who carry life insurance do so for the protection of their families. They want to know that should anything happen to them, their loved ones can maintain their current lifestyle and meet their own basic needs. Life insurance is an important form of financial protection secured by those who are wage earners for their families. Many people carry enough life insurance to replace a year of income or pay off any major debts, such as the mortgage on their home.
In some tragic situations, life insurance companies may attempt to deny claims based on the circumstances surrounding a person’s passing. Is the suicide of a policyholder a legitimate reason to refuse to honor a policy?
A waiting period is a common restriction
In most cases, suicide is only a temporary bar to a policy claim. Insurance companies often impose a lengthy waiting period to prevent scenarios in which the possibility of a payout contributes to the decision to harm oneself and to avoid abuses of the insurance system.
For most policies, the mandatory waiting period before that restriction lifts is two years from the date of policy acquisition. Many times, tragedies occur well after the policy takes effect and after the waiting period for coverage ends.
Reviewing the age of a policy and related policy paperwork can help families determine if they can file a life insurance claim successfully. If insurance companies refuse to honor a policy based on the cause of death, rather than policy limitations, surviving family members may need to take legal action to pursue the coverage they deserve and hold the offending company accountable for engaging in bad faith insurance practices.