Suicide coverage in life insurance

[lpeachtree]

The state is Colorado.
I recently had a family member (cousin) commit suicide. He had a current, valid life insurance policy that was not in arrears. However, his life insurance carrier is refusing to provide benefits to his wife (as designated beneficiary) because his death occurred a very short time (less than one month) after the suicide exclusion clause deadline of one year from start of coverage. While no one of the family can really know whether this was planned or strictly coincidental timing, the fact remains that according to the policy, the year had fully passed before the death. Refusal to pay the benefit has left his wife and family in difficult circumstances financially.
Are there any legal grounds for the insurance carrier to refuse or dispute the claim, assuming no misrepresentation of facts by my cousin in his original application (there is no indication that his death was planned)? Does an insurance company have a legal right to place a "dispute zone" of time around such a specified date? What has Colorado case law been on this or similar instances?
Any advice would be appreciated and relayed to the family. Thank you.

 

[ALawyer]

Most insurance companies have 2 year suicide and incontestible clauses in their policies. (Usually state law requires that they have such clauses with an outside limit of no more than 2 years, however I am not familiar with the details of CO law on this point.) I am surprised this policy would have had a 1 year suicide clause as companies no longer compete for policies on the basis of short suicide or incontestible clauses.

If the policy did have a 1 year suicide clause but it also had a 2 year incontestible clause the company may have a defense if the insured made any material misrepresentation, such as about a medical condition, or other requested information on the application. In such a case the policy could be contested if the death occurred, even if by suicide, within 2 years. And they do take a while to investigate.

The insurance company could argue that the insured's seeking the policy itself was fraudulent as he intended to kill himself after 1 year, and thus it should be set aside.

The beneficiaries' lawyer would argue that any such interpretation would seem to render the 1 year suicide clause essentially meaningless.

On the other hand, the insurance company's lawyer would argue the clause is not meaningless, as the 1 year suicide clause would protect the beneficiaries EXCEPT where the suicide was specifically planned in advance of the issuance of the policy, and the company would have the burdn of proving that this suicide was planned in advance.

I do not know which of the 2 arguments the court might buy, and it is likely to depend on a combination of prior Colorado case law and the facts. Of course if the insurance company is acting in bad faith, then it could be liable for bad faith damages too.