Suicide
Claims which might involve suicide should be looked at with greater care. Prior to the Suicide Act 1961, for a person of sound mind to take their own life was a crime. It is against public policy and legal intent that a person should gain from their criminal act and therefore prior to the Suicide Act 1961 no legal claim could be paid for suicide.
The Suicide Act 1961 abolished that basic rule but did not mention life insurance. There is therefore some doubt over the exact position that exists today.
Many life offices include a suicide clause in the policy. An example of this type of clause is as follows,
“If the Life Insured shall commit suicide within one year from the date of the policy all benefits which would otherwise have become payable shall be forfeited and belong to the insurer.”
If there is no suicide clause some parties argue that since suicide is no longer a crime the claim should be paid. Others however argue that as suicide is deliberate the insured can not recover from a policy where they have deliberately caused the event which produced the claim.
In the case of Beresford v Royal Insurance Co L7td 1938 it was decided that a fundamental term of an insurance contract is that a person can not by his own deliberate hand cause the event on which the claim is founded. Whilst this was prior to the suicide act, the argument used by the eminent judges was based on an implied contract term and hence law of contract and not based on criminal act.
The above does not apply if the life insured commits suicide whilst insane as they then do not have the mental capacity to commit a deliberate act.
Some times the life office will qualify the suicide clause so that it does not affect benefits offered to third parties.
“This suicide condition shall not prejudice the interest in such monies of any third party who shall have bona fide acquired that interest for valuable consideration.”
The life office themselves are not a third party to the contract even if they issued a loan to the insured with the life policy acting as security under mortgage deed. In the case of Royal London Mutual Society v Barrett 1928 the insurance company had a mortgage on the life policy to cover a loan. The court ruled that the life office was not a third party and therefore this clause did not apply. As the death was by suicide the policy was void and the life office would need to recover the debt against lease hold property instead.
If the life office can repudiate the policy then not only can the personal representatives not claim, neither can anyone else claiming an interest.
The burden of proving that the death was caused by suicide is on the Life office. The burden of proof may be difficult. In the case of Walsh v Legal and General Insurance Society Ltd 1935 a man died due to falling from the train within the first year of the life policy during the period when claims from suicide were excluded. There were no other passengers in the carriage at the time and no witnesses. The carriage door was sound with no defects and the coroner brought home a verdict of death by suicide. The life office declined to pay the claim, and was taken to court. It was held at court that the coroners verdict was not positive prove of suicide and the life office should settle the claim.