Life insurers shrug at assisted suicide

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The debate over physician-assisted suicide, brought into the public eye by Dr. Jack Kevorkian, stands as one of the most hotly contested issues today. Many questions surround the issue, but the question of whether life insurance policies will pay out to policyholders who opt for assisted suicide is one that has not been widely addressed.

Oregon stands alone

Twenty-five states have tried to adopt legislation that would make doctor-assisted suicide legal, but only Oregon has succeeded. Oregon’s law went into effect in October 1997 and outlines the legal safeguards for physicians aiding in the death of a patient. Measure 16 — as the act is known — specifically states that the sale of life insurance policies should not be affected by physician-assisted suicide. The measure goes on to say that the act of assisted suicide should not affect the payouts of a person’s life, health, or accident insurance.

Most life insurance policies contain something called a contestability clause. It generally states that within a two-year period of purchase, the insurance company will not pay out if the policyholder commits suicide. However, after that two-year period is up, the policy will pay out, regardless of when the person dies. This grace period exists in every state, but Oregon goes further.

Oregon’s Measure 16 says that if a person who is terminally ill buys a life insurance policy and then commits physician-assisted suicide within the contestability period, the insurance policy still has to pay out. “But the odds of that happening are very small,” said John Mangan, assistant vice president for public affairs at Portland, Ore.-based Standard Insurance Co. Mangan echoed other insurance industry sentiment when he said the adoption of this legislation by other states would mean a shift in public opinion, and not a hit to life insurers’ pocketbooks.

If an applicant is truthful about his or her medical conditions when applying for insurance, there is little likelihood that a policy would be issued for someone with a terminal illness. On the other hand, lying about your medical condition would mean the policy is void due to fraud, which means no payment would be made.

A pariah to politicians

“Looking at the political landscape now, no politician wants to touch this. No one wants to upset the strong religious conservative lobby out there,” said Barbara Lee, director of Compassion and Dying Federation, an organization that helped draft the legislation in Oregon.

Lee said that other states should seriously consider adopting their own version of Measure 16 because it would clarify the issue of assisted suicide and insurance payouts. “I think [the legislation] is fair and compassionate and it meets the needs of dying people,” Lee added.

Insurers address the issue indirectly

Physician-assisted suicide may have little impact on an insurer’s bottom line, but has the industry taken a stance on the matter?

“Normal industry practices have addressed the issue that Kevorkian brings up already,” said Jack Dolan, spokesperson for the American Council of Life Insurance, a lobbying group for the life insurance industry. Most life insurance policies use the contestability clause to address any kind of suicide. “The issue would have to play out a little bit more for there to be any grist for a discussion,” he added.

“Assisted suicide is a slice of something we don’t differentiate in,” said Bill Werfelman, spokesperson for the New York Life Insurance Co. Werfelman explained that New York Life will pay out regardless of whether someone commits regular suicide or assisted suicide, provided the policy is past the contestability clause limit.

“Most of our life insurance policies have the contestability clause,” said Joe Sazzino, spokesperson for The Hartford. Sazzino said that standard procedure is to include a clause in the policy language that says if there’s suicide after the first two years of the policy, payout will happen. The Hartford offered no official comment further than their insurance policy guidelines. However, one spokesperson did say that doctor-assisted suicide is a topic for the insurance industry to watch in the coming months.

“I’m not aware of any working group that’s talking about this because I’m not sure if there’s a problem with it now,” added Terry Vaughan, Iowa Insurance Commissioner and chair of the life insurance committee of the National Association of Insurance Commissioners.

Insurers may have to clarify

Though life insurance policies address the issue of suicide with the contestability clause, the life insurance industry has not seen a need to clarify its stance on the doctor-assisted suicide issue. However, as an Oakland County, Michigan, prosecutor charges Dr. Kevorkian with murder, the insurance industry may have to solidify its position on the issue of doctor-assisted suicides. “In light of recent events, we certainly will have to keep a close watch on what happens,” Werfelman said.

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Penny Gusner

Contributor

Penny is an expert on insurance procedures, rates, policies and claims. She has extensive knowledge of all major insurance lines -- auto, homeowners, life and health insurance. She has been answering consumers’ questions as an analyst for more than 15 years and has been featured in numerous major media outlets, including the Washington Post and Kiplinger’s.