Understand how suicide could destroy families’ financial security [Boss Insurance]

Understand How Suicide Could Destroy Families' Financial Security

When a family member dies by suicide, what happens to their life insurance policy? There is a common belief that there will be no payment, but that is not always the case. It depends on when the policy was taken out.

Generally, an insurance policy will not be paid out if the death of the insured is due to a self-inflicted injury within a certain time from the start of the policy. Typically, this period is two years, according to Progressive Insurance Company.

If the suicide exclusion period is over, life insurance can cover the suicide and pay the death benefit – provided no terms of the policy were breached.

The reason life insurance companies require the policy to be in place for at least two years is to protect against people buying policies and committing suicide soon after so families receive payment. The waiting period is known as the suicide clause.

The exclusion of suicides includes cases of physician-assisted suicide. Five states allow assisted suicide: California, Colorado, Oregon, Washington and Vermont, Forbes reported.

There were questions swirling when beloved artist Stephen “tWitch” Boss took his own life on Dec. 13. He was 40 years old. The former DJ and “The Ellen Show” sidekick left a note before he died of a gunshot wound to the head, the Los Angeles Times reported. The death was ruled a suicide by the LA County Coroner. The TV star died in Encino, Calif., a motel not far from the home he shared with his wife, Allison Holker Boss, and three children.

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It was later revealed that Boss had no will and some wondered if his wife and children would be in financial trouble due to his sudden death. Although there is no public information about his life insurance policies, his wife had to file a California spousal estate petition in Los Angeles.

A spousal ownership petition is a legal tool used to transfer or confirm ownership to a surviving spouse, according to the legal resource platform TrustandWill.com. This allows ownership to be transferred without going through the full probate process. The spousal petition is a state-specific form.

There were also rumors that Boss might have been in financial trouble. Although it has not been proven, his wife would not be responsible for this debt unless it was a shared debt, such as a co-signed loan or joint credit cards.

When a person dies with a debt, the debt does not disappear and the deceased person’s estate is responsible for paying any outstanding debt. Their assets will repay the debts. If there is no money or property left, the debt will generally not be paid. No one else is responsible for paying a deceased person’s debts, according to the Consumer Financial Protection Bureau.

Stephen “tWitch” Boss presents the award for Top Latin Artist at the Billboard Music Awards on October 14, 2020 at the Dolby Theater in Los Angeles. (AP Photo/Chris Pizzello)