Author: Ananya Tyagi, Student at Amity Law School, Noida.
Co-Author: Kritika Gupta, Student at Amity Law School, Noida.
A policy about life insurance was purchased by someone so that they have a financial stability for any contingency. The insurer makes a contract with the insured to provide a sum assured as a death benefit to the person whom he nominated in the event of an unexpected death of the insurer. Every insurance company is expected to ensure only genuine claims that arise due to the death of the policyholder. Alternatively, some cases of death in situations where the policy about life insurance will be unable to compensate the beneficiary, such as when the policyholder is dead because of an accident during an adventure sport, or the victim was under intoxicated while driving. Also, in situations where he dies due to a health condition which was hidden during the making of the life insurance policy.
On the other hand, If the policyholder kills himself, what will happen then? Can the amount which is guaranteed be paid to the policyholder’s nominee?
Felo de se or suicide is an event in which somebody cause self-inflicted injury which results in the death, but in reality, suicide has far-reaching impacts. A person commits suicide in the worst scenario, when he can be under some major debt, a personal problem, or a professional stress. In all the above situation the individual might have some money problems which lead him/her to take such a step, then the family comes under the heavy debt and has to pay, so in those tough times if the insurance steps back it will not be possible for the family to survive.
So, the insurance companies came forth as an abetment to the family of the insured through those tough times by providing them the benefits after the death of the insured subject to certain terms & conditions. These amendments came after 2014 and it tells us who are included as well as excluded from the suicidal life insurance claim. Which we will discuss further in this paper so that it makes easier for people to understand how the life insurance providers deal with this and make them aware.
ABOUT LIFE INSURANCE
“Yat bhavati tat nasyati – whatever is created will be destroyed.” Variation tends to be ordinary and every such amendment makes it risky, it is fairly similar to ownership. The proprietor in any case intends to protect the insurance policy holder from any risk as life is full of risks, so keeping this in mind insurance came into existence. Insurance policy is a contract which is amidst an insurer and policyholder, where they evaluate the amount which insurer is legally bound to pay against the losses. There is a multitude of different types of the insurance policies.
The term “Life Insurance Business” refers to the business of carrying out contract of insuring a human’s life, which take into account a contract under which the payment of affluence is guaranteed in the event of death or the occurrence of any event . Life insurance policy is usually made by a person who wants their family to remain financially secure after the death of policyholder. The primary purpose is to provide financial security to the deceased’s dependents. Some deaths are not protected by life insurance, such as when the policyholder dies in an accident or while driving while inebriated, resulting in a mishap, and so on. India and the United Kingdom are yet to provide a statutory description of the terms life insurance policy and life insurance contract. On the other hand it has been elucidated as “life insurance is a contract to pay a certain sum of money on the death of a person in consideration of a person in the consideration of the due payment of certain annuity for his life calculated according to the probable duration of life.”2 The meaning and essence of life insurance are specifically defined in this definition.
SUICIDE OR FELO DE SE
Felo de se is a latin phrase which means “felon of himself.” This is an ancient legal term which in general meant suicide. An adult who commits suicide was considered as a felon and was thereby punished by forfeiting his property to the king. However, a child or a person who is mentally unstable or rather incompetent to perform his own chores and kills himself will not be considered a felo de se and therefore was not punished. The term felo de se is not commonly used in legal practice.
Suicide is usually not an unforeseen or unplanned event on part of the insurer. India’s National Crime Records Bureau(NCRB) has published yearly reports since 1967 covering all states in India and Union Territories. Due to the pandemic many lost were jobs which increased the number of suicide cases in India, financial crisis was the main mental stress and according to the data, 80 people killed themselves each day. 
In India, committing suicide is not considered a crime. Enligh Common Law is inapplicable to India in this regard because India’s criminal law is based on the formation of statutes. The contract in Northern India Assurance Co. v. Kanhayala claimed that if the insured Moolchand caused his own death before the policy had been in effect for one year, the policy would become void. On discovering his wife’s infidelity, the insured against the policy to his Kanhayala killed himself by taking poison after the policy had run over for over 13 months. The court upheld the assignee son’s claim to the amount guaranteed on the grounds that suicide is not a crime in India and that the rules of English law that made suicide a felony did not apply. The question of whether suicide is against Indian public policy was addressed in the subsequent case of Scottish Union and National Insurance Co. v. Jahan Begum10, in which the insurer claimed to be the only company operating in India that published policies with no suicide restrictions also after the initial premiums had been paid, and that they will pay the amount guaranteed in the event of the life insured committing suicide. On August 31, 1935, the insured in this case purchased new life insurance policies and paid the initial premiums. He fired his second wife and himself a fortnight later due to domestic problems. When the insurance company rejected the insured’s claim, the court said: “Whatever the usage or the custom in this business may be, we cannot shut out an intention so clearly defined by the contemporaneous interpretation of the company itself. Nor can we ignore the conclusions to which we are inevitably led by the subsequent incorporation of suicide restrictions in the policies of 1935 onwards.” As a result, the court moved on to consider whether suicide is against Indian public policy or not. After a lengthy discussion of the Beresford case, the court declared unequivocally that suicide is not against Indian public policy.
Changes in the policies were made in 2014, all insurance policies did not include suicide clause. Before 2014 no claims were entertained by such companies where the insurer commits suicide. But from 2014. Amendments were made keeping in mind the ache and problems of the people left behind in the family.
THE SUICIDE CLAUSE
The term of policies were issued from 1st January 2014 which gives cover to the suicidal death to family of insured. Suicidal death cover of a term insurance plan is applicable after 12 months of issue date policy or 12 months after amelioration of policy. If the insured’s death is cause by suicide as of a genuine reason then nominee shall be paid in full, also be paid full death benefits. Before January 2014 suicide clause was held invalid and no claim was payable to the family/nominee.
For instance, each policy is unique. LIC specifically states that if a person, regardless of his or her mental state, commits suicide within 12 months of the initiation of the risk, it will not be entitled to a claim under this policy except for the 80 percent of premiums paid but not including additional premiums paid until death, and that this provision is not applicable if the life assured’s age is less than the age of 8 years and If a policy expires without being paid up, nothing will be paid out under the policy. If an individual commits suicide within one year of being revived, either 80 percent of the premiums paid up to the date of death (excluding additional premiums) or the surrender value, whichever is higher, is payable. LIC is an example of non-linked/ traditional life insurance plans.
Max life insurance on other hand provides to refund the total premium amount to be paid. Here as the full amount shall be recovered is an example of market linked life insurance plans.
If the insured is part of a group insurance policy by the employer, the suicide clause will not be applicable. As the only person who will be covered through this policy is the master policyholder i.e. the employer instead of an individual. So the individual will not receive any claim and will be at loss.
Also, the third party case where a policyholder has taken a loan against the life insurance policy and he commits suicide after fulfilling all the terms of suicide clause, then third party will be protected by the insurer. But, it is applicable only if the notice has been received by insurer, one month prior to date of death.
SITUATIONS WHEN SUICIDE CLAUSE IS NOT APPLICABLE
When the lapsed policy is renewed and later policyholder execute suicide within 365 days of your policy’s renewal date, the insurer has the right to deny your application.
Second, when insured provides the insurer with false/misleading information which is deceiving prima facie that will read to cancel the claim.
Thirdly, assigning a nominee is a crucial stage while taking insurance as nominee will be ensured. In extremely rare circumstances, the candidate will pass away before the policy’s payment is due. In such a case, the legal heirs would be entitled to receive the money.
Lastly. Under group insurance policy, if the policyholder was covered, you cannot seek suicide death benefits from the policyholder’s employer.. According to Policy bazaar, suicide clause is not covered under group insurance policy as they themselves have one year tenure and the suicide clause needs more than one year. Therefore it is not included here.
APPLICABILITY AFTER ONE YEAR
Within one year, it is protected by life insurance to will the company’s moral hazard risk. In order to stop insurance fraud as well. It is also possible that the policyholder is in default and purchases a life insurance policy to pay off the debt with the amount insured. One year is often believed to be adequate to be free of such an outlook.
However, suicide coverage is bestowed after completion of one year, to cover emotional as well as the debt distress which might cause him mental exhaustion and will look at it the only viable option to go through. These reasons could be faced by the dependants of the insured after the death of the policyholder. As it to be a paramount option to choose for life insurance is to keep dependants’ lives financially secure after their family member dies, providint the cover will give them support in that situation.
- LIC of India vs. Chhaya Hanmayya Ghante, dated 15.10.2014. In the said case, the Policy was questioned after two years and the Hon’ble Commission had observed that as the insured made untrue declaration, as such the orders of the Fora below were set aside and the Consumer Complaint was dismissed.
- LIC vs. Bina Joshi where the entries filled by agents, the policy holders were not blamed for concealing information.
Life Insurance Corporation Of India vs Jaswinder Kaur on 5 April, 201
As per section 45 of the Insurance Act 1938 it states that for two years, the policy will not be called into doubt because of a factual error.
It is very clear that as per Section 45 of the Act in force when the proposal was made and Policy taken, no Insurance Policy can be repudiated after two years on the grounds of concealment/suppression of facts. The amendment to Section 45 providing a period of three years came later in 2014. The present case is covered by this section before its amendment and the deceased died after more than two years nine months after taking the Policy.
Despite the stigma and taboo surrounding suicide, it is a fact, and we have statistics to back it up: According to the World Health Organization, almost 800,000 people die by suicide each year around the world. Suicide is the ninth leading cause of death in India, according to a survey. With a population of 178% of the world’s population, India is responsible for 366% of female suicide deaths and 243% of male suicide deaths.
Mental wellbeing is an issue of which we are becoming increasingly conscious. People now recognise that suicide is not a cowardly or criminal act. Suicide attempters are believed to be suffering from extreme stress, according to Section 115 of the Mental Healthcare Act, which was passed by the Indian parliament in 2017. As a result, the Act decriminalised suicide, requiring the government to provide care, medication, and recovery in order to minimise the risk of recurrence. Also, people actively seeking support, improvements in epidemiological data, improved planning, and resource distribution have all triggered other innovations..
Finally, suicide is normally covered after a duration of 12 months from the date of purchasing of the policy. In fact, it all depends on the terms of the policy. Suicide is normally protected after 12 months from the date of purchase of the policy, though it may not be covered in the first few years.
Life being a precious gift and it would be very helpful if the people with suicidal thoughts take all the possible necessary help to win the struggle . It is to be noted carefully that before giving the insurance claims the insurance companies conduct full investigation and assessment .
The insurer has the final word about whether or not to pay claims, and it’s possible that if anyone commits suicide and the insurer denies the nominee’s death insurance claim, say due to concealment of material evidence. As a result, the insured must look before jumping.
 This quote is taken from the philosophy of hinduism, and it expresses undeniable truth of insurance’s existence. In essence, it translates to existence, which is unavoidable, and death, which follows.
Dalby v. India and London Life Assurance Company (1854)