Life Insurance Policies and Suicide
Before I started to handle insurance cases, I always thought that suicide is a not an insured peril. My understanding at that point of time was that suicide is usually a deliberate conduct rather than an accident and therefore, it goes against the very nature of insurance policies to insured accidental events. I was right to a certain extent because this has been the legal position for many years. The first possible defence to a claim by an Estate for suicide is the fact that the death was intentional and brought upon by the insured himself and the second defence was that it would be against public policy to allow the Estate to benefit from the insured’s own conduct, which is deemed a criminal conduct in some jurisdictions.
Even so, some have successfully argued that where the suicide was committed in a state of insanity, the first defence would be knocked out and surely, it would not be against public policy to pay out on the claim. Realising this, insurance companies began to add a further exclusion clause into their life insurance policies to exclude coverage for insane suicide, i.e, where the insured committed suicide whilst in a state of insanity.
Nonetheless, realising that in certain other cases, the insured and / or his estate does not directly benefit from the suicide event (this is so in life insurance policies where the beneficiaries are third parties), insurers have begun to re-evaluate the exclusion towards claims resulting from suicide. Modern day clauses sometimes do include coverage for suicide with an express proviso that the benefit will only take effect after the lapse of a stipulated period of time, usually after 12 months from the date of the issuance of the policy. This, in a way, reduces the likelihood of an insured purchasing low cost life insurance solely with the view to committing suicide to benefit their loved ones.
So far, I have not actually handled any insurance claim resulting from suicide but I have seen some insurance policies with coverage for suicide, albeit on restricted terms. To my knowledge, there is no reported local decisions in Malaysia or even Singapore on an insurance claim arising out of suicide. It would definitely be interesting to see the outcome of one.