Suicide clause in life insurance contracts
Regrettable as it may seem, sometimes the outcome of a suicide is dealt with by the Quebec courts. Indeed, it was in such a context that the Superior Court and Court of Appeal, in the Bolduc case, recently had to rule on the nullity of a suicide clause in a life insurance contract.
Before examining this recent case, it is worth taking a brief look at the applicable principles to death by suicide and life insurance contracts.
Applicable law
The Civil Code of Québec1 (hereinafter “C.C.Q.”) provides:
2404. In insurance of persons, the insurer may invoke only the exclusions or clauses reducing coverage that are clearly indicated under an appropriate heading.
2441. The insurer may not refuse payment of the sums insured by reason of the suicide of the insured unless he expressly stipulated that coverage would be excluded in such a case and, even then, the stipulation is without effect if the suicide occurs after two years of uninterrupted insurance.
Any change made to a contract to increase the amount of coverage is, as regards the additional amount, subject to the initially stipulated exclusion clause for a period of two years of uninterrupted insurance beginning on the effective date of the increase.
The facts
The facts of the Bolduc case are simple.
On November 23, 2006, the late François Roch (hereinafter “Roch”) took out a life insurance policy.
On October 23, 2016, a new life insurance policy was issued. The policy is issued in the amount of $1,500,000. This insurance policy includes the following clause (hereinafter the “suicide clause”):
SUICIDE
“If, during the two (2) years following the effective date of a benefit, the insured dies by his or her own hand or act, whether sane or insane, the Company’s obligation is limited to the payment of a death benefit equivalent to the refund of premiums paid for this benefit, without interest.” [Our translation]
On February 19, 2018, unfortunately, Roch died by suicide. The suicide occurred less than sixteen (16) months after the last insurance policy was issued.
Following SSQ assurance’s (hereinafter “SSQ”) refusal to indemnify, the beneficiaries of the insurance policy initiated legal proceedings to recover the insurance indemnity.
They claim that the suicide clause incorporated into the general provisions of the insurance contract is invalid, void and unenforceable against the insured, since it is a clause that is not expressly stipulated in the insurance policy as being an exclusion clause.
In the alternative, they claim that the suicide clause is inapplicable to the facts of the case, since the insured’s suicide occurred after more than two years of uninterrupted coverage.
SSQ, for its part, contends that the suicide clause is an exclusion of coverage and that Roch was aware of the scope of this exclusion prior to the conclusion of the contract.
The judgment of the Superior Court2
In the first instance, the Superior Court noted that the scope of section 2404 C.C.Q. is as important for insureds as the scope of section 2441 C.C.Q. is for insurers.
When reading an insurance contract, an insured must be able to read the titles and be justified in thinking that all the exclusion clauses are concentrated under one appropriate title, and that he or she need not look elsewhere for another exclusion clause.3
In this case, the suicide clause is found in the “General Provisions”, and the clause does not expressly refer to an exclusion from insurance coverage, but rather to a limitation on the indemnity payable. Although the text of the clause is clear and unambiguous, there is no appropriate heading to indicate that it is an exclusion. Furthermore, a section of the policy focuses on exclusions, yet no mention of suicide is included.
The title “SUICIDE” contravenes section 2404 C.C.Q. since it does not allow the reader of the insurance policy to easily identify the existence of such an exclusion clause. All policy exclusions should have been included in a single section.
The Superior Court ruled that the suicide clause was null and void and of no effect.
SSQ was therefore ordered to pay the insurance indemnities in the amount of $1,500,000, plus interest and additional indemnity.
Before concluding, the Superior Court pointed out that the conclusion of a new insurance contract triggered a new two-year period for the application of the suicide clause. Thus, the two-year period began in 2016, not 2006.
The judgment of the Court of Appeal4
Beneva inc. (hereinafter “Beneva”), taking over from SSQ Assurances, is appealing the case.
According to Beneva, the Superior Court should have analyzed the context of the suicide clause in order to decide whether or not the title was adequate. Moreover, Beneva maintains that the title “SUICIDE” is highly evocative for any reasonable insured.
In its ruling, the Court of Appeal reviewed the history of the notion of suicide in insurance law. Until 1976, under the Civil Code of Lower Canada, suicide was automatically considered a cause for nullity of a life insurance contract. At the time, the legislator considered suicide to be a socially reprehensible act, contrary to public order. It is interesting to know that, at the time, suicide, death at the hands of the law and death resulting from a duel were all grounds for nullity of a life insurance contract.
The Court of Appeal was of the opinion that the purpose of section 2404 C.C.Q. is to clearly indicate to the insured the exclusions, reductions and limitations of the insurance policy. The analysis of the title of a clause must be based solely on that title, and not on the clause as a whole.
In the present case, the title “SUICIDE” above the suicide clause does not make obvious to the reader the result or consequences of the clause, i.e. the exclusion, limits or restrictions on insurance coverage. The fact that the suicide clause is found in the general provisions rather than in a specific exclusions section, which exists a few pages later in the insurance contract, argues for invalidity under section 2404 C.C.Q. and the inadequacy of the clause’s title.
That said, the respective positions of the Court of Appeal and the Superior Court differ on one point. The Court of Appeal is of the opinion that section 2404 C.C.Q. does not require that all exclusion clauses be grouped together in a single section in a life insurance contract. For the Court of Appeal, there is no reason to dictate to insurers the rules for drafting insurance policies, particularly as regards their structure. However, it does consider that exclusions relating to the same coverage should be grouped under a single appropriate heading, so that they are not dispersed or disguised. In this case, the lack of uniformity between the titles is striking, and accentuates the difficulty of identifying the suicide clause.
However, the Court of Appeal’s distinction does not change the outcome of the case. The Court of Appeal concluded that the suicide clause was null and void and could not be set up against the beneficiaries of the insurance policy. The appeal was therefore dismissed.
Conclusion
In closing, if your insurer refuses to indemnify you and honour the insurance policy, it would probably be wise to speak to your lawyer.
1Civil Code of Québec, RLRQ., CCQ-1991, art. 2404 and 2441.
2Bolduc c. SSQ Assurance, 2023 QCCS 266.
3Lemay c. Assurance-vie Desjardins, [1988] R.J.Q 659 (C.A.).
4Beneva inc. c. Bolduc, 2024 QCCA 589.