Does Life Insurance Cover Drug Overdose? An Answer From REAL Policies

Does life insurance cover drug overdose?  If you’re asking this, you’re not alone.  It’s the 5th most common question Googled about life insurance.

The quick answer is yes. Life insurance policies do cover drug overdose deaths.

It doesn’t matter what the substance is or how illegal it is to possess it in.  Life insurers will pay out the policy’s death benefit, even if the insured’s death resulted from drug overdose.

To prove this out, we’ll first look at excerpts from actual life insurance policy contracts.

In Section II, we’ll cover the one, common-sense caveat to the above.

And finally, in Section III, we’ll discuss how this answers differs for Accidental Death Insurance (hint: it differs significantly).

Let’s dive in.

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I. The Drug Overdose Epidemic

In 2019, U.S. deaths from drug overdose reached an all-time high of almost 72,000.  Opioids alone (also referred to as prescription drugs) accounted for more than two-thirds of these deaths.

That’s 200 new, heartbroken and irrevocably-changed families every day.

These deaths are part of a larger trend, which has seen overdose death rise nationwide in 24 of the past 25 years.

Drug Overdose Deaths Have Risen Each Year Since 1999
Source: drugabuse.gov; December 2020

COVID-19 Has Not Helped Matters...

In 2020, COVID-19 made this already difficult situation worse.  Deaths rose by an estimated 13% nationwide, with some regions seeing an increase of ~30%.

The isolation bought on by the pandemic exacerbated mental health issues, which often co-occur with addiction.

And more tangibly, the economic effects of the pandemic resulted in the closing of many addiction treatment centers and overall reduced access to recovery support services and life-saving treatments.

If You Need Help, Please Reach Out

I’ve seen addiction up close.  It’s a progressive illness that only gets worse.

Just as you would be foolish to try to give yourself a liver transplant, the same holds for treating your own addiction.

If you’re struggling (or if a loved one is), know that there is more help out there than you know.

And much of it won’t cost you a thing.

Just start looking for it.

II. Is Drug Overdose Covered By Life Insurance?

Having glimpsed the scope of the drug overdose crisis, let’s return to the main question:

Can life insurance claims be denied if the insured died from a drug overdose? 

Its turns out that the answer depends on two additional questions:

  • Was the death within or after the first two years of the policy?
  • Was the drug overdose accidental or intentional?

When Did The Overdose Death Occur?

Why does it matter when the death occurs?

It’s because the initial years of the policy (usually the first two years) is the period when the insurance company can challenge the validity of your claim and potentially deny the claim.

This period is therefore called the “contestability period”.

After the contestability period, life insurance companies can deny claims for only two reasons: (1) if there is an explicit exclusion within the policy or (2) if there was a gross misrepresentation on the application (i.e., fraud).

The purpose of this “contestability period” is easy to guess.  Insurance companies do not want to incentivize people to buy a policy and then end their lives for their loved ones’ financial gain.

Scenario 1: The Death Occurs 2+ Years After You Get The Policy

The easy case, therefore, is if the death occurred after the first two years of the policy.

If the insured died after the first two years of the policy, then yes, the life insurance company will pay out the death benefit.

RBC Term Policy -- Death Benefit Exclusion
Excerpt from an RBC Term Life Policy Contract, Showing The Section That Describes Exclusions to the Death Benefit

After this two-year period, life insurance claims for drug overdose will receive a death benefit payout just like those for any other medical condition cause of death.

Here’s the part that surprises most people, though.

After the first two years, many life insurance policies cover drug overdose, even if it is intentional.

While this may sound striking, it is just another way of saying that life insurance policies cover suicide after the contestability period (which they indeed do).

Scenario 2: The Death Occurs During The First 2 Years

Now for the trickier situation.  What happens if the insured dies within the “contestability period” (the period during which the insurance company can challenge your claim)?

Remember, the main case where the life insurance companies can deny your claim within the first two years is if the death is intentional.

So to have your life insurance claim approved and to receive the death benefit payout if the insured’s drug overdose death occurred within the first two years of the policy, you have to be able to prove that the death was an accidental death.

This can be more difficult if the death was from an overdose of an illegal drug, like heroin, cocaine,  or meth.  In these cases, the insurance company can argue that the insured should have known that these substances were highly dangerous and that taking them would have a high chance of resulting in death.

It’s much easier to argue for an accidental death if the drug was prescribed by a doctor, and for example, the insured took more of the drug than he or she was prescribed.

When Can A Company Deny A Claim?

The one scenario where your life insurance claim would be denied is if the company learns you lied on your initial application.

For example, if you stated on your application that you had not never attended inpatient drug treatment, when in truth, you had.  In this case, a life insurance company could successfully deny your beneficiary’s claim.

And life insurance companies nearly always conduct investigations after drug overdose deaths, so lies and misrepresentations are inevitably discovered. 

Conclusion

Just because mental health is less tangible to us does not make it less real.  Addicts deserve adequate treatment and both they and their loved ones deserve our love and compassion.

Drug overdoses are also no less costly to a family, so it’s good to see our life insurance companies and laws serving their function: to protect families from the financial hardship of death.

If you have any remaining questions, please don’t hesitate to leave a comment or send us an email.  This is an important topic for many families, so keep pressing until your questions are thoroughly answered.

Warm Regards,
The GetSure Team

RJ

RJ

RJ is the Founder & Head of Content at GetSure. He is a licensed life, accident & health insurance agent, with over 10 years of experience in the financial services industry. He holds a B.S. in Applied Mathematics from Columbia University and an MBA from The Stanford Graduate School of Business.
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