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Minister seeks 'greater clarification' on suicide clauses in life assurance policies

When asked if he would make such clauses in policies illegal, Paschal Donohoe said he wanted to delve into the matter further.

Image: Sam Boal/Rollingnews.ie

MINISTER FOR FINANCE Paschal Donohoe has said that he is to seek “greater clarification” from the insurance industry, after being asked if he had any plans to make “suicide clauses” in life assurance policies illegal.

While Donohoe said he cannot interfere in determining what an insurance contract covers, he wants this practice looked at and his officials have contacted Insurance Ireland about the issue.

A suicide clause in a life assurance policy means that an insurer won’t pay out in the event that a person has died by suicide within a set period, and will only be required to pay the reserve or the total premiums paid.

It is one of a number of clauses that could affect the payout of a life assurance policy, including the incontestable clause – if a person is suspected of withholding information from an insurer – or a cancellation clause – when the insurer and/or the person insured is allowed to cancel the contract before it expires.

Fianna Fáil mental health spokesperson James Browne asked the question of Donohoe, and told TheJournal.ie last week that some insurers engage in “discriminatory practices” and the industry may have an “outdated understanding of mental health” that must stop.

He was responding to a case where someone who had recovered from a mental health condition had been denied life assurance.

Similarly to the case of suicide clauses, Minister Donohoe said it was not possible for him to interfere in what an insurance company deems to be a risk they are willing to accept.

“Consequently, I am not in a position to direct insurance companies as to the pricing level or terms or conditions that they should apply in respect of particular categories of policyholders or particular products,” he said.

However, he did add that this was a topic worthy of exploring in further detail.

Donohoe said: “Having said that, because of the very specific and sensitive nature of your question, I believe that it is important to get greater clarification of how this matter is handled by the industry.

Therefore, my officials contacted Insurance Ireland seeking information on the general approach taken by insurers in Ireland in relation to suicide clauses.

Insurance Ireland is set to take a survey of their members to clarify what their current practice is regarding suicide clauses, and once that’s done a further update will follow. 

A spokesperson for the group affirmed it had taken the actions detailed by Donohoe, where he said “it has been agreed with Insurance Ireland that they undertake a survey of their members to clarify what their current practice is regarding this matter”.

Donohoe had added: “Once this exercise has been completed and appropriately considered, Minister of State D’Arcy will write to update you on this matter as soon as possible.”

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Sean Murray

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