Wednesday, July 28, 2010

State Laws Regarding Suicide Exclusion on Life Insurance in Montana

The state of Montana, like every other state, regulates the insurance industry as it applies to business conducted within its borders. Life insurance products and policy contracts offered for sale within the state, or to residents of the state, must meet specific guidelines and adhere to established regulations.

With respect to death by suicide and the payment of life insurance claims in such a situation, the state of Montana adopted legislation shared by the majority of the country’s other states. Montana Code sections 33-20-121 and 33-20-105 describe, very specifically, how policy provisions may, and may not, be written and implemented.

Incontestability Period

Montana life insurance contracts contain provisions allowing the carrier to reduce, or even refuse, payment of benefits in certain situations. If an insured person dies within two years of the date a life insurance policy was issued, regulations permit the carrier to investigate the death for the purposes of detecting fraud, misrepresentation, or violation of any other contract provisions.

Suicide Within the Incontestability Period

Suicide within the two-year incontestability period violates the terms of a life insurance contract. If an insured person’s death is deemed to have been intentional, regardless of mental stability, benefits may be withheld by the insurance company. In such situations, the only monies payable to beneficiaries are the aggregate sum of all premiums paid for the policy.

Suicide After the Incontestability Period

Suicide occurring after the two-year incontestability period cannot be considered a violation of a life insurance policy’s terms and conditions. Full and complete benefits must be paid to beneficiaries without limitation or exclusion.

References Montana Insurance Code 33-20-105 – Incontestability Montana Insurance Code 33-20-121 – Prohibited Provisions

Resources (Further Reading) Suicide and the Life Insurance Death Claim

This article is a Twisted Nonsense Exclusive! (07/28/2010)

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