The life insurance market in a period of social reform: voluntary assisted dying

The Voluntary Assisted Dying Bill 2017 (Vic) was passed by the legislative assembly on 21 September 2017, and is currently awaiting consideration by the legislative council. The purpose of the Bill is to regulate access to voluntary assisted dying.

There has been much debate in Australia about the impact of voluntary assisted dying on life insurance claims. Most life insurance policies exclude “suicide” within the first 13 months of cover, so those who access voluntary assisted dying within this period may forfeit their beneficiary’s entitlement to a lump sum payout on their death.

Supporters of voluntary assisted dying are lobbying for the cause of death on a patient’s death certificate to be listed as the illness which lead them to seek assistance, rather than “euthanasia,” thereby protecting beneficiaries. This will also protect patients who, concerned by the suicide exemption, may feel pressured to make a “terminal illness” claim in their dying months. Most life insurance policies include “terminal illness cover,” whereby a person diagnosed with a terminal illness with a life expectancy of less than 12 months is entitled to their benefit in full, before their death.

Australia has been criticised for lagging behind other countries when it comes to social reform. This debate is no exception. The Financial Services Council, representing the $28bn life insurance industry, criticised draft South Australian legislation which included a provision stating that the cause of death of a person resulting from euthanasia will not be taken to be suicide or homicide. The Council argued that the industry needed to know “the true cause of death” so that it could adequately price life insurance policies, but the public remained concerned that insurers were in fact objecting to an effective removal of the suicide exemption.

The South Australian Bill was narrowly defeated on 17 November 2016, however, supporters in that State, and all other States and Territories, continue to push for reform. As the debate progresses, life insurers need to consider what it is the insureds – the Australian public – want.

Will they be persuaded to follow the progressive, and popular, position adopted in Canada? There, Head of the Canadian Life and Health Insurance Association, Frank Zinatelli, told the federal government, its members were willing to lift the standard two-year exemption for suicides and pay out on policies for those who end their life through voluntary assisted dying because “the industry has determined that this is obviously something the Canadian population wants and we’re not going to stand in the way of that.”  Whether this position is adopted in Australia remains to be seen as debate and public appeal continues. Watch this space!

If you have any queries or would like further information regarding this article, please contact:

Sophie Pennington
M: 0405 807 135

Published: 16 October 2017

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