A Study on the Suicide in Insanity in U.K. Life Insurance Policy

Abstract

According to the OECD report, the suicide rate in the U.K. in 2020 was 8.4 per 100,000 people, significantly lower than South Korea's rate of 24.1 per 100,000 people. In the U.K., however, suicide is a more serious legal topic than in other countries. In the U.K., life insurance policies can pay out for suicide. Nevertheless, most policies have provisions or clauses that limit death benefit payments. Typically, a policy will not pay for suicides committed within a one- or two-year period(commonly referred to as the exclusion period), even if the suicide was committed while in a state of insanity. In the case of a reinstated insurance contract, this period shall be calculated anew. However, if the suicide occurs after the exclusion period has expired, the insurer will pay the claim regardless of whether the suicide was committed in a sane state of mind, if the suicide was intended from the time the policy was taken out, or if the suicide was committed solely for the purpose of collecting the claim. Suicide exclusion clauses of this nature are standard in U.K. life insurance policies. On the other hand, unlike most individual policies, suicide clauses are not standard in group policies. An incontestability clause, which usually sets a two-year contestability period, operates independently of the suicide clause and allows suicide to be contested. The main difference between the U.K. and South Korea is that disputes over the payment of suicide benefits are rare in the U.K. This motivated the author to write this article. The traditional attitude of English law has been largely adopted in U.S. insurance law and practice. In Korea, in life insurance (suicide within two years) and accident insurance (suicide within the policy period), the insurer's exemption from its liability depends on whether the suicide was committed in a state of insanity. However, in recent suicide benefit litigation, beneficiaries have often argued that suicide was committed in a state of insanity, and courts have recognized insanity more broadly than in the past. This trend of interpretation by the courts goes beyond the purpose of the suicide exclusion, which is to be construed narrowly in cases of insanity. Furthermore, the socioeconomic costs of the ongoing disputes are increasing. This paper focuses on the fact that Anglo-American insurance practice has significantly resolved the problems faced by the Korean insurance industry. This paper first introduces the historical background of British society's view of suicide, dramatically influencing the insurance practice related to suicide. The paper will then analyze the Beresford decision, an essential reference in the Anglo-American literature on suicide exclusions. Based on the above discussion, the article analyzes the current attitudes of the U.K. terms and conditions and summarizes the points for our reference. The issue of suicide in U.S. insurance law and practice, similar to but different from the U.K.'s, will be introduced in a follow-up study.