Underwriting Dignity: Assisted Dying

As the UK looks ahead to a major change in the concept of ‘end of life’, the insurance industry has about 2 and a half years to prepare itself. Eleos, a fully digital provider of life insurance, considers what that means.

On 29th November 2024 the Terminally Ill Adults (End of Life) Bill passed its second reading in the House of Commons by 330 votes to 275. It then passed to the committee stage, after which it returns to the Commons in April where it will have its third reading before passing to the House of Lords. Once both Houses have agreed on its provisions it will receive Royal Assent and pass into law. There will then be a 2-year implementation period before the law comes into effect, probably by early 2028.

The bill applies only to residents of England and Wales. It gives a right to ask for help in ending their lives to people who are at least 18 years old and:

• Are terminally ill, with six months or less to live, according to professional diagnosis
• Have full mental capacity
• Have shown 'a clear, settled and informed wish to end their own life'
• Have not been pressured or coerced into their decision

The procedure will consist of:

• Assessments by two independent doctors
• High Court approval
• A 14-day reflection period (2 days if death is imminent)
• Self-administration of a prescribed lethal drug

There are a number of important issues that will need to be overcome by insurers to avoid disputes, challenges and regulatory clashes.

1. Current treatment of suicide in life insurance

Most UK life insurance policies exclude claims for death by suicide within the first 12-24 months of taking out the policy. After that period policies will pay out.

Leading reinsurer SCOR recommends that assisted dying should be subject to the same ‘suicidal death clause’. That would mean policies would not pay out for an assisted death within the first 12-24 months of a policy.

However, other countries may provide a different model. In Canada, assisted dying is already legal and it is not treated as suicide by insurers. The UK industry has more than one option.

2. Terminal illness benefits

Life insurance policies that offer terminal illness payouts define terminal as having 12 months or less to live. There’s a potential conflict with the 6-month period specified in the bill, which may require insurers to redefine their terms.

3. Claims processing

It’s likely that insurers will conduct more thorough investigations into the circumstances of an assisted death, in order to verify that it meets all the criteria. This could delay payouts.

4. Underwriting and premiums

Insurers may revise their models for assessing risk and calculating premiums, which could lead to a more restrictive underwriting process.

5. Terms and exclusions

With a change of this magnitude, it seems almost inevitable that insurers will want to rewrite the nature and extent of key terms like exclusions and waiting periods.

6. Forfeiture

One problematic consequence of the bill could be the operation of the forfeiture rule which stops people inheriting from the estate of someone in whose death they have played a part. It may be beyond the authority of the insurance industry to address this problem and would probably require additional legislation.

As far as life insurance policies are concerned, a beneficiary’s involvement in the death of the insured might suggest some level of coercion, even if High Court approval was correctly obtained, especially if the terms of the policy have been recently amended.

7. Trusts

Where a life insurance policy is held in trust, its trustees have a legal duty to make reasonable enquiries into the death of the insured. These enquiries could be complex and time-consuming, resulting in delayed payouts.

With less than 3 years to get ready, insurers have no time to waste in addressing these challenges – and others which may emerge before the law comes into effect. 

It seems likely that insurers will move as one in treating assisted dying differently from suicide because a split could create uncertainty and inequity within the industry, endangering cooperation and complicating life for consumers.

Policyholders and those planning to take out life insurance may need to take professional advice on the implications for their cover of the new law and the likely changes in industry practice.

Between now and 2028 insurers need to work in collaboration and through their trade bodies to develop clear guidelines, practice standards and new policy terms. 

Eleos CEO Kiruba Shankar Eswaran commented: “History has shown us that even the best drafted legislation can have serious unintended consequences, so the more preparation the industry can do, the better equipped it will be to respect the choices of individuals while maintaining the integrity of life insurance policies and guarding against abuse. It’s a responsibility we at Eleos don’t take lightly.”