Summary: Under current law, insurers may deny a death benefit if the insured dies by suicide within two years of the policy’s issuance. This bill shortens that exclusion period to one year. If a death benefit is denied during that one-year period, the insurance company must refund all premiums paid for the denied coverage. The change would apply only to life insurance policies issued after the law takes effect; the bill also includes a 6-month implementation period following the enactment.
Analysis: Life insurance policies have historically included suicide exclusion periods to prevent individuals from obtaining a policy with the intent of immediately taking their own life in order to provide financial benefits to beneficiaries. These provisions are commonly structured as waiting periods before full coverage becomes effective.
Under current Delaware law, claims can be denied if the the insured dies within two years of the policy being issued. After the exclusion time has passed, suicide deaths are then to be treated the same as any other–this exclusion period will now be one year if HB 299 is passed. The bill also adds that if coverage is denied, the insurance company must pay all previously paid premiums to the policyholder’s estate or beneficiaries.
From a worldview standpoint, insurance policies have traditionally reflected the societal concern of not incentivizing death by including safeguards intended to discourage suicide as a means of financial provision for loved ones. While HB 299 does not eliminate these safeguards, it weakens them by reducing the time period during which they apply. As always, it is valuable to look at the sponsor to determine intent behind the legislation. What does it say about the intentions for this bill, when its sponsors also supported HB 140, the bill that legalized suicide?