Does a Drug Overdose Break a Life Insurance Policy?
A drug overdose doesn’t necessarily warrant the cancellation of an insurance policy. It all depends on the reason behind the drug overdose. There is a possibility for the insurance policy to be canceled, if the cause of death was a suicide by means of a drug overdose. On the other hand, if it were an accidental overdose and death occurred two years after the application of the insurance policy, then; the beneficiaries will still be able to receive the proceeds.
Other important factors will determine whether or not the family will be able to claim the benefits of the insurance plan. For instance, if the policy is updated and has been regularly paid on time, then there shouldn’t be a problem with insurance carrier. The means of payment, as well as when they were made are also part of establishing the release of cash proceeds.
Most, if not all, insurance policies have a clause for suicide. It’s a clause that states that if a suicide occurs within two years upon signing the policy, then the cash benefits will not be given to the family. Sometimes, insurance carriers pay a portion of the paid premiums when the suicide happens before the end of the waiting period. A few carriers will even pay the full amount. Proof of treatment for a mental illness, or existing mental illness may be required by insurers. At times, it could be complicated to prove that the overdose was not intentional. Evidences like a suicide note, or as previously mentioned, treatment for people at risk for committing suicide are helpful. Otherwise, these deaths might be categorized as inconclusive. It is the insurance company that has to carry the burden of proof. Chances are, when a coroner doesn’t establish suicide as the cause of death, the insurance company won’t deny the claim unless it has proven that suicide was truly responsible for the loss of life.
An accidental overdose won’t affect the cash proceeds to be handed to the beneficiaries. Though, some exemptions to this rule exist. The waiting period that lasts for at least two years, is on the top list that needs to be completed. This condition needs to be met, if death happens before its completion, then no cash proceeds will be given to the beneficiaries. Usually, premium payments are returned to the families so they can still avail of a portion of the amount.
Most group life insurance policies indicate an accidental death clause. This means that the policy will be canceled in the event of an accident, in this case, an overdose. It has the same logic as the suicide clause, where payouts can be affected. Accidental death clauses are not common in individual life insurance plans. If your insurance is provided by an organization or your employer, there’s a good chance that this clause is included.
A term that policy holders need to be familiar with is “material misrepresentation”. Insurance carriers will do a thorough job of reviewing the policy and even the application documents of the plan holder. If there was information that was missed out or incorrectly stated, for example, history of drug abuse, companies can use this in order to deny a claim.