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Does A Life Insurance Company Pay Claim In Suicide Cases?
[Posted by: InsuringIndia Blog on 10-Mar-2016]
An unnatural death of a family member brings with it a sense of loss, grief and immense heartache. At the same time, it also carries with it the responsibility of sorting out financial matters pertaining to investments and insurance policies which cannot be ignored. If the deceased had insured himself before taking an extreme step like a suicide, does it mean that the family will have to file a claim to receive monetary benefits from the insurance company? Can the claim be considered void? What are the specific clauses or reasons under which an insurance claim can be rejected? The following facts explore all the ground realities:
What is a Life Insurance Policy
This policy is essentially a contractual agreement between an insurance policy holder and the insurance company where the holder pays fixed amounts to the insurer in the form of premiums. This is done on the agreement that the insurance company will pay a designated beneficiary a sum of money in return for a premium, upon the death of the insured person (often the policy holder). In case of a Term Insurance Policy, upon the policy holder's death, his beneficiaries or kin get the money. 
What can happen to a claim in a suicide case? 
While the insurer may have taken a term insurance cover, fact is if he dies due to a suicide then there are high chances that the claim filed by his kin may be rejected. In fact, insurance companies have a suicide clause as an ‘exclusion’ where the legal heirs or the next of kin of the policy holder who’s committed suicide may be denied claim, under certain circumstances.
Usually, most life insurance policies have a clause where they do not pay the policy holder's kin 'in case the suicide of the policy holder whether sane/ insane' has occurred with a year of buying an insurance cover. However, there are a number of other factors too that can cause a rejection of claim. 
Any incomplete section or data pertaining to job, health etc can result in a rejection of claim and cause further trauma to the deceased’s kin who may be dependent on him for financial support.
If a lapsed policy is renewed, & the suicide of the policy holder occurs within 12 months from the date of issue of the policy or the date of any reinstatement of the policy. 
If the policy holder has withheld any information regarding his health then even if the suicide has occurred after a 12 month period of buying the policy, the insurance company has the right to reject a claim.
Some companies insert certain clauses that take into account misstatement of age clause. Though the policy does not end because of this reason but it can certainly impact the amount that the insured may get as the death benefit is adjusted as per the actual age.
The suicide clause is also not applicable in the group life insurance policies. 

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