Life Insurance and Suicidal Death in Canada – Explained
Hi, WealthTrack founder David Pipe here. When someone dies by suicide, the emotional aftermath is profound. But alongside the grief, families are often left wondering about practical matters — such as whether a life insurance policy will still pay out. This is a sensitive and often misunderstood subject.
In this guide, we’ll explain how life insurance handles suicide-related deaths in Canada, including what’s typically covered, what the suicide clause is, how mental health factors in, and what steps you can take to protect your loved ones.
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Does Life Insurance Cover Suicide in Canada?
Yes — but not always immediately. Most Canadian life insurance policies do pay out in the event of suicide, as long as certain conditions are met.
The most important of those conditions is called the suicide clause.
What is the Suicide Clause?
The suicide clause is a standard part of most life insurance contracts. It prevents a death benefit from being paid out if the policyholder dies by suicide within a specified period after the policy is activated.
In Canada, this period is typically:
Two years from the policy start date or the date of the last reinstatement.
If suicide occurs after this period, the death benefit is usually paid out in full, just as it would be for any other cause of death.
Example:
You purchase a term life insurance policy in January 2023.
If the policyholder dies by suicide in May 2025, the payout is typically honoured.
If it happens in May 2024 — within the 2-year window — the insurer may deny the death benefit.
Why Does This Clause Exist?
The suicide clause exists to:
Prevent insurance fraud or manipulation of the system
Protect insurers from large financial risks during the early phase of coverage
Allow time to underwrite properly and assess risk
It’s not about punishment — it’s about managing risk. Importantly, this clause applies to all deaths by suicide, regardless of mental health history.
What Happens if Suicide Occurs During the Clause Period?
If the suicide occurs within the 2-year exclusion period, here’s what usually happens:
The full death benefit is not paid to the beneficiary.
The insurer may instead refund the premiums paid to date.
The policy may be voided entirely.
That said, insurers review such claims on a case-by-case basis. In some cases — especially if mental illness can be proven to have affected decision-making — a payout might still be considered, though this is rare and requires legal or medical input.
What About Pre-Existing Mental Health Conditions?
Life insurance companies in Canada ask detailed questions during the application process, including questions about:
Past or current depression
Suicide attempts or ideation
Mental health diagnoses (like bipolar disorder, PTSD, or anxiety)
Current medications or therapies
If you disclose a history of mental illness, you may still be approved — but possibly at a higher premium or with certain exclusions. The key is honesty. If you conceal or misrepresent this information and die within the first two years, your claim may be denied on the grounds of material misrepresentation, even if the death wasn’t a suicide.
If you’re honest about your mental health, your beneficiaries are more likely to receive the payout — even if your death is self-inflicted after the clause expires.
Group Life Insurance and Suicide
Many Canadians receive basic life insurance through their employer. These group life policies often:
Provide a lower amount of coverage (e.g., 1-2x salary)
Have fewer underwriting requirements
May or may not include a suicide clause
Some group policies don’t include a suicide exclusion — especially if coverage is automatic. However, always read the group policy’s terms carefully, as these vary widely.
What If the Policy Was Reinstated?
If your policy was previously cancelled or lapsed and then reinstated, the suicide clause clock might restart. That means the new 2-year countdown begins on the reinstatement date, not the original policy start.
This is especially important if you missed a premium and reinstated the policy later.
Is Accidental Death Insurance Different?
Yes. Accidental Death & Dismemberment (AD&D) policies only cover accidental deaths — things like car accidents, falls, or sudden trauma.
AD&D policies do not pay out for suicide, ever.
They're not meant to replace life insurance, and shouldn’t be relied on for full family protection. If you’re seeking protection against any form of death — including by suicide — standard term or whole life insurance is what you need.
How Can Families Protect Themselves?
Here’s how you can ensure your loved ones are protected — no matter what happens:
1. Buy Life Insurance Early
It’s often more affordable and less restricted when you apply young and healthy. The sooner you buy, the sooner the suicide clause starts counting down.
2. Be Honest on Your Application
Disclose your full health and mental health history. Lying or omitting information may lead to claim denial.
3. Consider Term Insurance
For covering mortgages or children’s expenses, term life insurance offers high coverage amounts with lower premiums.
4. Read the Fine Print
Ask about the suicide clause when buying — don’t assume all policies are the same. Make sure you understand when and how the benefit would apply.
5. Work with an Advisor
A licensed life insurance advisor can walk you through your options, help you find a policy with fair mental health considerations, and answer sensitive questions.
Mental Health and Life Insurance: A Changing Landscape
In recent years, the stigma around mental health is decreasing — and some insurers have responded.
Many are now less likely to deny based on therapy or mild depression alone.
Suicide clauses remain in place, but insurers are more transparent.
Specialized products exist for people with a mental health history.
If you’ve been turned down before, that doesn’t mean you're uninsurable. Conditions like anxiety, seasonal depression, or burnout are not automatic disqualifiers.
Final Thoughts: Life Insurance and Suicide in Canada
Losing someone to suicide is a deeply painful experience. While life insurance can’t take away the grief, it can provide financial stability when it’s needed most.
Here’s what to remember:
Suicide is covered by most life insurance policies after a 2-year waiting period.
Full honesty during the application is critical.
Even with a mental health history, coverage is often available — sometimes with modified terms.
Group policies may have different rules, so review them carefully.
Talk to a licensed advisor for personalized guidance.
At WealthTrack, we believe in protecting your family’s future, no matter what life brings. If you have questions or need support choosing the right policy, we’re here to help.
Need guidance on life insurance for your situation?
Reach out today — your peace of mind is worth it.
