Does Term Life Insurance Cover Substance Abuse Related Loss of Life?

Death by substance abuse overdose doesn’t necessarily mean that the benefits will not be paid. Almost every term life policy has a clause for suicide, but not all deaths related to drug overdose are classified as suicide. In most cases, the policy will be canceled and the money will not be paid to the beneficiaries if the death is ruled a suicide.

Reasons the insurance company might not pay out:

  • The coroner rules the death a suicide
  • The insured person lied about drug use
  • Death occurred within the first two policy years
  • Payments were missed

What if the drug overdose was a suicide?
The terms of the policy will decide whether the insurance company will pay anything when an insured person intentionally overdoses. Typical suicide clauses state that the insurance company pays nothing if the insured suicides within two years of starting a policy. Some insurance companies will return a portion or all of the premiums paid by the insured if suicide happens within the initial two years. It pays to read the fine print.

Accidental overdose
If there is an accidental overdose that ends in a tragic death, and it happens after the first two years of the policy, the insurance company will most likely pay out the full face value of the benefits. If the coroner writes accidental overdose as the cause of death, and the medicine was prescribed, most insurance companies will not question it.

Inconclusive cause of death
The coroner cannot always determine a reason for a substance abuse overdose and will declare the cause of death inconclusive. A paper trail may prove to be important if there is any question. Medical records and past history may help or hurt the outcome of the investigation.

If the insurance company decides to fight the payout, things like a suicide note or treatment directly related to suicide prevention may stand in the way of payout. If there is a question about cause of death, it is up to the insurance company to prove the death was a suicide before they can deny the claim. If they decide not to pay the policy, the insurance company must provide an explanation. Beneficiaries have the option to take the company to court if they refuse to pay and they feel the decision is unjust.

Other factors
For any term life insurance policy to pay the full value to beneficiaries, the policy must be up to date and the premium payments must be paid regularly and on time. Another thing that may affect whether a term life insurance will cover substance abuse related loss of life is material misrepresentation. If the insured person lies or leaves out information about past drug abuse, the insurance company can legally deny the claim and not pay the beneficiaries following a substance abuse overdose. In most cases, the insurance company will honor the agreement and pay the beneficiaries unless there are clear reasons why they are not obligated.

Posted in Life Insurance, Term Life Insurance
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