What Minnesota's Revised Suicide Exclusions Statute Means for Insurers

While the life insurance policy suicide exclusion is not an easy subject, most life insurance industry professionals are very familiar with those provisions.

The provisions bar beneficiaries from receiving payment on death claims when the insured party dies as a result of suicide.

However, a recent change to Minnesota Statute Section 61A.031, which spells out the insurance-relevant provisions in the “land of 10,000 lakes,” imposes new requirements on life insurers who issue policies containing such a provision.

This statutory amendment is likely to be one of many changes for the industry to monitor as America’s growing acceptance of mental health issues and the ensuing familial strain seep into new legislation and court decisions.

The statute takes effect soon.

First, some context. Minnesota Statute 60 was enacted in 1967, and its arrival coincided with the creation of the state’s Human Rights Department.

The follow-on Section 61A pertains specifically to life insurance policies.

The current version of Section 61A.031 states in part that for purposes of a suicide exclusion, “the sanity or insanity of a person shall not be a factor in determining whether a person committed suicide,” but the provision contains no limitation on the length of the exclusionary period.

This past summer, lawmakers amended Section 31 of Minnesota Statute Section 61A with this new language:

“A life insurance policy or certificate issued or delivered in this state may exclude or restrict liability for any death benefit in the event the insured dies as a result of suicide within one year from the date of the issue of the policy or certificate. Any exclusion or restriction shall be clearly stated in the policy or certificate. Any life insurance policy or certificate which contains any exclusion or restriction under this paragraph shall also provide that in the event any death benefit is denied because the insured dies because of suicide within one year from the date of issue of the policy or certificate, the insurer shall refund all premiums paid for coverage providing the denied death benefit on the insured.”

The revised statute (as well as the statute mandating certain notices to policyholders who replace their insurance, section 61A.60, subdivision 3) takes effect Jan. 1, 2024, and applies to policies issued on or after that date.

However, the phrasing of the provision raises the question as to whether an insurer applying a suicide exclusion is effectively paying a limited benefit in the form of a refund of premiums.

The relevant language in the act prompts two questions.

1. Has the time period that many life insurance policies include in a suicide exclusion provision for a Minnesota policyholder been reduced?

The answer is yes unless a policy already has a one-year limit on the exclusion.

Prior to the amendment, a life insurer issuing a policy in Minnesota could decide how long the suicide exclusion would be effective. The exclusion period was often two years.

The amended statute limits the time to invoke a suicide exclusion to one year and requires that insurers must refund premiums paid for instances in which the death benefit had been denied.

While the statute is too new to have been challenged in court, its language surrounding the time period looks legally sound and is substantially similar to other state statutes.

Interestingly, proceedings from the Minnesota House of Representatives’ discussion during the enactment process reveal that the initial recommendation was to limit the time period to three months.

A compromise was struck to land on one year, a time increment consistent with that now used in other states, such as Colorado and Missouri.