Is the discrimination worth it as a deterrent? Or is it just to save the instance companies $$$?
A life insurance policy doesn’t have to pay out if you take out the policy AND commit suicide in a short period of time. If it’s after that period of time the policy MUST pay out. That is law. Former life insurance salesman here.
So since it is a relatively short period of time, it’s say it shouldn’t have any real change in suicide rates
I didn’t realize there was a time limit on the non-payout. That’s good to know. Friend of a friend just took his life and I’ve been worried about the kids. Hopefully they will be taken care of.
Typically the limit is 2 years.
Life insurance is basically a bet on how long a person will live, structured in a way to give a payout to a deceased person’s survivors. Depending on how long the person lives, the payout may be larger or smaller than the total amount of payments the person has made to the insurer.
(If the payout is smaller than the total you paid in, your heirs would be better off if you’d stuck that money under your mattress, or in a savings account, or municipal bonds or something.)
Suppose you’re the insurer. You are, in effect, a professional gambler. You are in the business of making bets and, in the long term, making money by making good bets.
If you’re in the business of making bets, you don’t make a bet with someone for whom it’s not a bet but a sure thing. Professional gamblers don’t play Find-the-Lady games.
In the case of life insurance, the insurer expects that the covered person intends to keep living. They may die soon due to an accident or unexpected sudden illness, but they themselves would prefer not to.
A person who already plans to commit suicide at the time they take out the life insurance policy, doesn’t fit that profile. To them it’s not a bet, it’s a sure thing. There’s no chance there. They may be doing it out of desperation … but to the insurer’s side of the deal, it’s still a bad bet.
And since the insurer decides what policies they will write, they get to decide not to take that bet.
It’s not a deterant against suicide, it’s to stop suicidal people taking out life insurance to give their loved ones a pay off before they top themselves.
Insurance is a bet between Client and Insurer that the client will pay more in before the insurer has to pay out.
I don’t think it’s meant as a suicide deterrent, but about saving the insurance companies money.
Idk but I couldn’t get a life insurance policy for my husband because he is bipolar. They flat out denied him.
You raise a good question, but here’s the thing.
In Australia discrimination may be unlawful if it pertains to:
age disability, or race, including colour, national or ethnic origin or immigrant status sex, pregnancy, marital or relationship status, family responsibilities or breastfeeding sexual orientation, gender identity or intersex status.religion, political opinion, national extraction, nationality, social origin, medical record, criminal record or trade union activity.
The kicker here is - insurance companies are allowed to – that’s how their business works.
Most policies limit it to two years after policy inception for the suicide exemption iirc. That probably keeps them legally kosher with regards to discrimination.
The whole point of insurances is discrimination.
People would have incentive to kill the insured and pass it off as suicide.
You make it sound like they cannot make them fall of a mountain or some other “accident” already.
Well, the more options. The easier it will be to defraud insurance.
I don’t think it is discrimination, fraud prevention maybe? in a very loose sense of fraud.
When you enter a insurance contract you agree to pay x amount until you die or you cancel the contract. By getting the contract then passing away you prevent the income the insurance company needs to keep its house of cards afloat.
Interest question. I would guess (with no scientific evidence) that it wouldn’t have a significant impact but that is only a guess.
Little column A, little column B
