Life insurance claims can be turned down in event of suicide

Three in every four adults who die by suicide are male. When it comes to people aged 19 or younger, four in every 10 ...
ROBERT HOETINK/123RF

Three in every four adults who die by suicide are male. When it comes to people aged 19 or younger, four in every 10 suicides are female.

Life insurers are wary of being used by a person considering suicide to leave a legacy for their loved ones in the form of a life insurance payout.

As a result, most insurers won't pay out for deaths caused by self-harm in the 13 months after the policy is issued.

Similarly, if someone increases their cover and then kills themselves, the insurer may pay out the amount the person was originally covered for, but not the increase.

There were 12.27 suicides per 100,000 in the 12 months to the end of June 2015.
ADRIAN HILLMAN/123RF

There were 12.27 suicides per 100,000 in the 12 months to the end of June 2015.

But there's a second, less commonly recognised side to insurance and suicide: the large number of people who try to kill themselves, but survive the attempt, and later go on to take out insurance.

READ MORE: Let's talk about suicide

Statistically, New Zealand's overall suicide rate is in the middle of the OECD pack, but it is high among younger people, and so is the attempted suicide rate.

Ministry of Health figures show in 2012, 71 people in every 100,000 were hospitalised for self-harm, compared to 12.3 people per 100,000 who killed themselves.

When people take out insurance, failing to reveal past suicide attempts is likely to lead to insurers refusing to pay claims should the policyholder die, or fall sick.

Some cases through the years have found their way before the Insurance and Financial Services Ombudsman.

NON-DISCLOSURE OF SUICIDE ATTEMPTS

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2013: In 2011 a woman took out life and mortgage protection insurance. She died of natural causes in 2013. The insurer found she had not disclosed an attempted suicide by overdose of prescription pills in 2010.

The insurer told the Ombudsman it would have charged triple the premium had it known the woman's full medical history.

Despite that, the insurer made a voluntary payment of just over $50,000 to her estate. It would have been in its rights to pay nothing.

2013: In January 2012 a woman took out trauma insurance, but failed to tell the insurer about an attempted suicide. When she made a claim for cancer in 2013, it was declined.

The ombudsman found the insurer had a legal right to do so.

CLAIMS AFTER SUICIDE

2009: It is not always clear if someone has deliberately killed themselves, which is why insurers' policy wordings exclude death caused by self-inflicted injury in the first 13 months of a policy.

That means that if a person dies from something like a drugs overdose, where it is not clear if they intended to kill themselves, the insurer can decline a claim.

In one case a man took out life insurance in March 2009, and died of self-inflicted morphine intoxication in December the same year. The dead man's estate did not believe he intended to kill himself, but the wording of the policy meant the insurer did not have to prove he did, just that he died as a result of self-inflicted injury.

2004: A couple cancelled their life insurance with an insurer, and less than a week later, took out new policies with the same insurer. The insurance adviser knew of this plan, but failed to tell the insurer it was "replacement" business, on which the 13-week suicide exclusion should have been waved.

When one of the couple committed suicide, the insurer declined the claim. The ombudsman ruled it had to pay up.

2003: When a man died after swallowing medication, his insurer refused to pay a life insurance claim relying on policy wording which said no suicide would be covered in the first 13 months of the policy, whether the man was sane or insane.

The coroner was unable to determine whether the man had intended to kill himself, or had even realised that taking the medication would kill him. Without proof of intention, the insurer had to pay the claim.

2004: The husband of a woman who killed herself found her insurer refusing to pay the claim because she had not disclosed she had once taken the antidepressant Prozac.

It was a material non-disclosure, and the insurer was within its rights not to pay, even though the 13-week suicide exclusion period had passed.

CLAIMS AFTER A SUICIDE ATTEMPT

2010: A woman driving her car collided with a power pole. Her insurer believed it to be a suicide attempt, and not an accident, and so declined her claim.

A psychiatrist found the woman was incapable of forming an intent to take her own life as she was suffering from a depressive illness with some psychotic features.

The ombudsman found the woman could not therefore have committed a "reckless" act, as the insurer alleged, which meant it had to pay the claim.

2008: In another case a woman who crashed on a motorway the same day as the bank she worked for discovered she was stealing from customer accounts, had her car insurance claim turned down by an insurer, suspecting she had intended to kill herself. It said her driving was "reckless, grossly careless, or grossly negligent". The ombudsman's investigation found expert evidence did not indicate the woman perceived the risk of her actions, and the insurer had to pay up.

Where to get help:

* Lifeline: 0800 543 354 - Provides 24 hour telephone counselling

* Youthline: 0800 376 633 or free text 234 - Provides 24 hour telephone and text counselling services for young people

* Samaritans: 0800 726 666 - Provides 24 hour telephone counselling.

* Tautoko: 0508 828 865 - provides support, information and resources to people at risk of suicide, and their family, whānau and friends.

* Whatsup: 0800 942 8787 (noon to midnight)

* Kidsline: 0800 543 754 (4pm - 6pm weekdays)

If it is an emergency or you feel you or someone you know is at risk, please call 111

For information about suicide prevention, see http://www.spinz.org.nz.

 - Stuff

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