New California “Death with Dignity” Law presents complications in life insurance industry

Much of the discussion about California’s “Death with Dignity” law, officially the End of Life Option Act (Assembly Bill X2-15[Eggman]) has been about whether or not a person of sound mind with a terminal illness should have the right to accelerate the process and receive aid-in-dying medication. California has settled this discussion from a legal perspective by passing X2-15 but the lingering question in the insurance world has been “What about life insurance?”

Life insurance has long held exclusions on paying the death benefit in the event of suicide. During the debate prior to the passage of The End of Life Option Act, insurance professionals sought guidance on what would happen to life insurance policies in the event that a covered individual invoked their right to these aid-in-dying medications. Would they still be able to collect on their life insurance policies, or would the suicide exclusion prevent them from collecting the death benefit if they took advantage of the newly-passed law?

California insurance commissioner Dave Jones ended speculation this month, siding with the insured.“Terminally ill patients in California now have a choice when facing end-of-life decisions and do not have to worry that the choice will cause them to lose their life or health insurance or annuity policy,” said Commissioner Jones. ¬†The new law will not consider the request of aid-in-dying medications to be a suicide.

Commissioner Jones went on to state that “Many of the health care services someone would seek at the end of life under the new law are considered basic health care services that are required to be covered in most health insurance policies sold today. Existing law also requires many health insurance plans to cover all FDA approved outpatient prescription drugs, so I expect that many health insurance policies and health plans will cover drugs that physicians may prescribe to patients for aid-in-dying.” It seems that not only will life insurance benefits be upheld, but also that health insurance policies will be required to cover these aid-in-dying requests.

The decision comes at no surprise to those who have followed Commissioner Jones’ career closely. As an Assemblyman in 2007, he co-authored an earlier aid-in-dying bill, believed to be inspired in part by his experience with his own terminally ill grandfather.