Does Life Insurance Plans Pay for Suicidal Deaths in India?

However, if the suicide occurs within the first 12 months, most insurers typically refund only 80–100% of the premiums paid, excluding taxes and rider charges. This clause applies to both term insurance and traditional life insurance plans. Always check the suicide exclusion clause in your policy document for clarity.

What Are the Types of Life Insurance Plans that Provide a Suicidal Death Benefit? 

Most life insurance plans in India provide a death benefit in case of suicide, but only after the policy has been active for at least 12 months. This rule is consistent across various types of life insurance. Here are the main plan types that cover suicidal death:

• Term Insurance Plans: These plans offer a high sum assured at affordable premiums. If the policyholder dies by suicide after 12 months of policy start or revival, the nominee receives the full death benefit.

• Endowment and Savings Plans: These combine life cover with savings. After the initial 12-month period, suicidal death is typically covered, and the sum assured (or applicable benefit) is paid to the nominee.

• ULIPs (Unit Linked Insurance Plans): ULIPs offer investment and life cover. Suicide after 12 months is generally covered, and the nominee receives either the fund value or the sum assured, depending on the policy terms.

• Whole Life Insurance Plans: These provide lifelong coverage. Suicidal death after one year is covered under most plans, subject to terms.

• Child Insurance Plans: If the parent (life assured) dies by suicide after the 12-month waiting period, the child (nominee) receives the benefits as per the policy.

What are the Old and Current Provisions of Suicidal Death Benefits?

The Indian regulating authority, IRDAI, presented a new change in provisions regarding the death claim related to the suicide of the policyholder in 2014. According to the old provisions, all the life insurance policies purchased before January 2014 will offer no death benefit in case of suicidal death during the first 12 months of the policy issuance/revival. This means that the policy would be invalid and the death claim filed on suicidal death would not be payable. This provision was created to help insurance companies escape insurance fraud. For example, a person might have a few financial liabilities and to escape them, he/she purchased a life insurance plan. After a few months, the policyholder commits suicide to cover the debt amount with the life insurance payout.

According to the new changes, term insurance plans issued after January 2014 will provide at least 80% of the premiums paid on the death of the policyholder during the first 12 months of policy issuance/revival. Therefore, any life insurance plan purchased after the year 2014 pays the death claim in case of the suicidal death of the policyholder. 

For example: 

Rama was an account head at a large MNC in Delhi. Being an accountant, she understands the importance of a life insurance plan. Therefore, she considered opting for a life insurance plan in her financial planning. A few years later, Rama commits suicide because of depression, and her family members are left without any financial backup. Since Rama had purchased a life insurance plan before committing suicide it will provide Rama's nominee with a lump sum amount.

For suicidal death occurring after the completion of the first 12 months of the policy issuance/revival, the death benefit will be paid as usual. That means the entire sum assured on death will be paid to the nominee of the policy in a lump sum amount.

Why Does Life Insurance Cover Suicidal Death India?

Although suicide is not considered an unforeseen death, the insurance company provides a death claim to help the family suffering from the loss of a loved one. There are a number of reasons why the life assured might have committed suicide. It can be due to debt payment, mental illness, emotional stress, or other such reasons. This payout can help the family members take care of their financial obligations and maintain their current quality of life.

Exclusions of Suicidal Cover in Life Insurance Plan in India 

There are some common exclusions in life insurance policies in India. The insurer will reject the death claim to any bonus on maturity during the below cases:

• Most life insurance plans have a provision that states that the insurer is not liable to pay if the life assured dies because of suicide within 12 months from the issuing date of the policy. The insurer is not eligible to pay if the death of the life assured occurs before the revival of the life insurance plan. 

• Life insurance plans generally provide coverage for suicidal death after completing 1 year. This gap of 1 year helps insurers to know that there is no case of fraud in insurance. If the policyholder’s death occurs within 1 year i.e., 12 months of the risk commencement, then the insurer offers 80% of the premium amount paid. For example: if Rama had an eligible beneficiary/nominee, then he/she might get 80 percent of the premium amount paid until that point.

• An insurer is not required to pay the claim amount if the policy tenure has lapsed and the paid-up amount remains unpaid.

• Also, the insurer is not eligible to pay if any fraud in insurance is committed on the part of the life assured. 

Do All The Life Insurance Plans Pay for Death Because of Suicide in India? 

Most insurance plans were updated after 2014 with the suicide provision. This simply means that a policyholder will receive a lump sum amount if he/she has an eligible beneficiary/nominee. If the life assured dies after the fixed time of one year, nominees are liable for the death benefit.  

What Are the Cases When You Are Not Eligible for Suicidal Cover? 

Most insurers have strict guidelines for any kind of misleading detail provided by the life assured. In such scenarios, the beneficiary is not eligible to get any amount from the insurer. The insurer is required to pay only if the life assured has not committed any insurance fraud. In addition to this, if the life assured is insured in any group insurance plan, the nominee is not eligible for any payment. 

Wrapping It Up!

Suicidal deaths have been rising in India for several reasons. Some important reasons are emotional instability, dearth of education, debt, etc. The reality is that the family members related to an individual who attempted suicide are going to be affected. So, to answer the most commonly asked question, "Does life insurance cover suicidal death in India?" Yes, a life insurance policy will protect the financial needs of the family in case of suicidal death or death occurring after the completion of 12 months of policy issuance/revival. However, you must compare plans online and go through the T&Cs related to suicidal death before purchasing the most suitable policy.

Note: Check all the best term insurance plan in India.

Note: You should also check the benefits of term life insurance if you are planning to purchase the term insurance plan.

FAQs