UPDATED: Jul 24, 2011

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Written By: Laura BerryReviewed By: Daniel WalkerUPDATED: Jul 24, 2011Fact Checked

If someone dies from a drug overdose, are the proceeds from a life insurance policy canceled? The answer depends on several things including how the drug overdose happened and the type of life insurance coverage.

Why did the Drug Overdose happen?

If the overdose was not accidental, then a suicide clause may apply. Suicide clauses are included in most life insurance policies, and the normal term for them to apply is two years from the date of creation of the policy, although some policies may have shorter or longer suicide clause periods. If a person commits suicide within that period, no benefits will be paid, although premiums may be refunded after a processing fee has been subtracted. This clause is put in place to prevent someone from taking out a large insurance policy when the intention is to die quickly and leave money to the beneficiaries.

If an insurance policy is denied due to the suicide clause, it can be very painful for the survivors. They have not only lost a beloved family member, but they are also denied the benefits the deceased intended for them to have. One way to prevent the suicide clause from taking effect is to purchase a rider, or an addition, to the policy which will cover suicide. However, these riders are very expensive and have strict rules which govern them. All in all, suicide within a short period of time after purchasing a policy will negate the policy, so an intentional overdose may indeed have this effect.

Even after the suicide clause has expired, an intentional drug overdose may still cancel a policy, depending on the language used in writing the terms. Intentional drug overdoses may be viewed as dangerous activity, which is prohibited by many policies. The only way to know for sure if your policy covers you in this event is to read it carefully and talk to your agent about the possibilities. As most people are reluctant to talk with an agent about a potential suicide, this does not usually happen, and some beneficiaries are unpleasantly surprised when the time comes to claim the benefits.

Accidental Drug Overdose

Accidental drug overdoses are classed differently. Since the person was not attempting to end his or her life, it does not fall under the suicide clause. However, the accidental death clause may apply. This is a section of many group or organizational policies that states that if the person dies from accidental causes, the premium will be reduced or canceled. The purpose of this clause is to keep costs low for group insurance, which is usually offered through an employer. While some accidents may be covered, others may not; again, the only way to know for sure is to read your policy carefully.

Material Misrepresentation

There may be another problem with an accidental overdose that is founded on “material misrepresentation” when the policy was taken out. Most people who overdose accidentally are not first-time drug users; in fact, they may have a drug habit that has been ongoing for some time. When you take out a policy, the insurance company will ask many questions about your health and habits, often requiring you to submit to some sort of physical exam to check for certain conditions. If it is discovered that a person overdosed as a result of a long-term drug habit, and the person did not report this drug use on the initial application, it is very possible that the insurance company may refuse to pay the death benefits on the groups that the application was fraudulent. Many insurance physicals test for drug use; some do not. That is dependent on the company and its policies.

Sometimes, it is difficult to determine if a drug overdose was intentional or accidental. In these cases, the insurance company will usually want proof, such as an autopsy and witness testimony, that the overdose was not intentional. This can lead to unforeseen costs to the beneficiaries and a prolonged waiting period to settle the policy and receive the benefits. Ultimately, the resolution will depend on the findings of the coroner or law enforcement officials. In most cases, when there is a question of suicide or accident, officials err on the side of caution and classify the death as accidental. However, this is not always the case, and if further evidence is presented at a later time that the death was not accidental, it can cause tremendous problems for the beneficiaries, who may already have received the payments.

If beneficiaries feel that a life insurance claim has been denied unfairly, there is legal recourse for them. They will have to hire an attorney to pursue the case in court, which can become very expensive. For a smaller policy, the life insurance company may be willing to settle for a portion of the proceeds rather than fight the battle in court; if the policy is large, the insurance company’s lawyers will probably choose to pursue the case rather than pay.

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A former insurance producer, Laura understands that education is key when it comes to buying insurance. She has happily dedicated many hours to helping her clients understand how the insurance marketplace works so they can find the best car, home, and life insurance products for their needs.

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Written by Laura Berry
Former Insurance Agent Laura Berry

Dan Walker graduated with a BS in Administrative Management in 2005 and has been working in his family’s insurance agency, FCI Agency, for 15 years. He is licensed as an agent to write property and casualty insurance, including home, auto, umbrella, and dwelling fire insurance. He’s also been featured on sites like Reviews.com.

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Reviewed by Daniel Walker
Licensed Car Insurance Agent Daniel Walker