Thursday, January 10, 2019

Sad news: A client story

Over the weekend, a long-time agency client took his own life. Dan was a retired (and much beloved) pediatrician who had been (recently?) diagnosed with both dementia and Parkinson's. One supposes that, as a physician, he knew what lay ahead, and decided to forego that.

Something that often comes up in these tragedies is the issue of whether or not a life insurance policy would "pay off." As with so much insurance-related "conventional wisdom," it's not actually all that simple.As we wrote back in Aught Nine:

"Until just after the Great Depression, 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

Our condolences to Dr C's family.
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