A study on the effect of exclusion period on the suicidal risk among the insured

An exclusion period (usually from 12 months to 2 years) is usually found in life insurance policies as a precautionary measure to prohibit people from insuring their lives with the intent to kill themselves shortly thereafter. Several studies have been conducted to investigate the effect of exclusion periods on the risk of suicide among the insured in the US and Australia. However, while Hong Kong has experienced an increase in the number of suicides among the insured, little is known about the dynamic between the exclusion period and suicide in Asia. Here we make use of death claims data from one of the major life insurance companies in Hong Kong to ascertain the impact of a 12-month exclusion period on suicide risk. We also use utility functions derived from economic theory to better understand individual choices regarding suicide among the insured. More specifically, we sought to determine whether there is a greater risk of suicide immediately following the 12-month exclusion period. We also examined whether the risk of suicide claims was higher than that of other non-suicidal claims. The study period for this investigation was from January 1, 1997 to December 31, 2011, during which time there were 1935 claims based on 1243 deaths. Of these, 197 were suicide-related claims for 106 suicide deaths. The mean number of life policies held by suicidal claimants and non-suicidal claimants was 1.6 and 1.4, respectively. The average/median size of the claims (total payment made on all policies held by the insured life) was HK$665,800/426,600 and HK$497,700/276,200 for suicidal and non-suicidal deaths, respectively. The policy lifetime of the claims, or the number of days from policy issuance to suicide occurrence, ranged from 38 to 7561 days, with a mean of 2209 days, a median of 1941 days, and a standard deviation of 1544 days. The peak density of suicide claims occurred on day 1039 of the policy. Our results revealed that suicide claims tend to occur earlier than other claims and that there is a greater risk of suicide observed following the 12-month exclusion period. Some suggestions are made in terms of extending the exclusion period, which is anticipated to significantly reduce suicide at the global level.