Robert J. McKennon, founding shareholder of McKennon Law Group PC, shared his comment for an article discussing important clauses in insurance policies entitled “Does Suicide Invalid an Insurance Claim? It All Depends on the Language in the Policy.” The author of the article, Trevor Kupfer, requested Mr. McKennon’s expertise as to several important clauses in insurance policies, including incontestability clauses, suicide clauses and accidental death and dismemberment clauses. Mr. McKennon is quoted extensively in the article and he discusses some of his cases dealing with the issue of suicide vs. accident. On February 2, 2018, the article was published to the “Super Lawyers” website, a ratings service that recognizes prominent lawyers for high levels of professional achievement. Mr. McKennon, an attorney who has practiced for over 30 years and mostly represents policyholders in life, health and disability insurance matters, has been a recognized Super Lawyer every year since 2011. The article appears in full below, reprinted with the permission of Super Lawyers.
DOES SUICIDE INVALIDATE AN INSURANCE CLAIM?
It all depends on the language in the policy
By Trevor Kupfer
There are two prevalent misconceptions about life insurance and suicide. One is informed by stories like It’s a Wonderful Life, Death of a Salesman and Bulworth, where the down-on-his-luck protagonist considers the insurance benefit to their loved ones if they commit suicide. The other is quite the opposite: that if you commit suicide, your insurance policy is void. So which is it?
“It all depends on the language of the policy,” says Robert J. McKennon, an insurance and employee benefits attorney at McKennon Law Group in Newport Beach. “It’s one of the first things I look at.”
Insurance policies are like any contract: It’s all about what’s in the fine print.
The Suicide Clause
Some life insurance policies may pay benefits regardless of suicide, others may require a certain amount of time to pass after finalizing the policy, and “a number of life insurance policies have exclusions for suicide or self-inflicted injury,” McKennon says.
But even if a policy has a “suicide clause,” the law says that the language must be plain, clear, and conspicuous. “That’s a grey area,” McKennon says. Several cases have set precedent on what it means to be conspicuous, but it ultimately depends on what a judge decides. “And if the court thinks it’s not clear and conspicuous, the clause is not enforceable.”
The Incontestability Clause
McKennon has handled several cases that deal with incontestability. This common policy clause allows an insurance company to argue that the policyholder provided inaccurate information, thus voiding the contract. The clause often contains a provision stating that the policy becomes incontestable after a period of time.
Depending on the terminology of the clause, however, it may make an exception for fraud. “That someone intentionally withheld information,” McKennon explains, “like a past history of mental illness or prior suicide attempts.” Failing to provide such information puts a policyholder at risk of fraud, and therefore no benefits.
Accidents & the Burden of Proof
In theory (and certainly in the movies), one could go from insurance company to insurance company taking out life insurance policies, and lying the entire time. Then, in the event of their death, if the insurance company doesn’t contest anything, their beneficiaries will receive the benefits.
In fact, 99 percent of all life insurance claims are paid in full, according to the American Council of Life Insurers. However, that doesn’t mean some don’t encounter denials, appeals, and legal fights that delay said payment. One doesn’t have to look far to find examples.
A famous one from 2011 involved a Montana man who was battling cancer when he died in a car accident. Shortly after, his life insurance claim was denied when the company argued it was suicide. A more recent example was a client of McKennon’s.
“She was standing outside the shower, slipped and fell, and her neck wrapped around the cord for the handheld part of the shower, in its holster. She lost consciousness and ended up dying a few days later,” he says. “The insurance company investigated and concluded it was a suicide. We said, ‘No, it was an accident.’ They decided we were correct on appeal, and paid the claim, and now we’re suing on the grounds of bad faith.”
The key in McKennon’s shower case was expert testimony that it was an accident. The burden of proof in such cases is an interesting wrinkle, he notes. If a policy excludes suicide, the insurance company has to prove it was suicide. “That can make the difference in your case. If the answer isn’t clear and can go either way, the party with the burden of proof could lose, and the insurance company always has the burden with respect to an exclusion in the policy,” he adds.
As with anything, each case depends on the circumstances and verbiage in the policy. Insurance attorneys deal with this on a regular basis, and it’s always advisable to seek reputable legal advice in the event of a claim denial.