Tuesday, November 24, 2009

Suicide Insurance? Setting the Record Straight [Updated & Bumped]

PoliBlogger Michelle Malkin has an update on a tragic story from September; news junkies may recall that a census worker was found dead, apparently hung. On his stomach was scrawled the word "Fed," leading many to believe that this was a cold-blooded murder. Suspicion fell on moonshiners and "rednecks," but there was scant evidence to support either of these theories (among others).

According to new information released by the authorities, it appears that this may well have been an elaborately staged suicide, the point of which was to leave the proceeds of a life insurance policy to the victim's son. Unfortunately, the news reports cited by Ms Malkin leave much to be desired vis: suicide and life insurance.

For example:

"Life insurance policies typically do not cover suicides within a certain time period after the policy begins."

Correct, to a point.


"“If it’s deemed suicide, there’s no point in even looking at insurance,” the son said. “There’s no such thing as suicide insurance."

Again, correct - to a point.

Until just after the Great Depression [ed: what was so "great" about it?], suicide was excluded by life insurance policies. There was, it was thought, a very good reason for this: it would be against the public interest to encourage folks to kill themselves to enrich those left behind. And there's some validity to this: we don't want to make such an outcome attractive to people to leave an inheritance at the cost of one's own life.

But a lot of people who lost everything in the Depression killed themselves anyway; not for the insurance (there wouldn't be any) but out of desperation and despondence. And this left behind a lot of widows and children who lost a parent and a spouse along with their life's savings. This was also against the public interest.

So, how to reconcile these two seemingly irreconcilable principles?

New laws were enacted that required life insurance policies to cover suicide after a "reasonable" period ("reasonable" in this case meaning no more than two years). The premise is that no sane person is going to buy a policy with the intent of waiting two years to jump out a window; that a person would do this was ample demonstration of mental illness, and that would be a covered exposure. This protects the interests of innocent family members, while still discouraging a casual view of suicide.

So no, there is no "suicide insurance;" but that was never really the point in the first place.

UPDATE: It's now official:

"A Kentucky census worker found hanging from a tree with the word "fed" written on his chest killed himself and staged his death to look like a murder, authorities said Tuesday."

Turns out, he had recently purchased not one, but two new life insurance policies on himself; the amount at risk has not been disclosed.

This is truly a tragedy: any time someone takes his (or her) own life it leaves behind unanswered questions and leaves grieving families without closure. It's just a shame that some chose to exploit this particular situation for their own political ends.
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