Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceEasy
An insurance policy contains a provision that states if the insured commits suicide within a specified period (e.g., two years) from the policy's issue date, the insurer's liability is limited to a refund of premiums paid. What is this provision called?
- ASuicide Clause
- BReinstatement Provision
- CGrace Period
- DIncontestability Clause
Show answer & explanationAnswer & explanation
Correct answer: A. Suicide Clause
The Suicide Clause is a standard life insurance provision that limits the insurer's liability to a refund of premiums if the insured commits suicide within a specific period, typically two years, from the policy's issue date.
Why the other options are wrong
- B. A Reinstatement Provision allows a lapsed policy to be put back in force.
- C. A Grace Period is a time after the premium due date during which a policy remains in force.
- D. The Incontestability Clause prevents the insurer from denying a claim due to misrepresentations after a certain period, not suicide.
Suicide Clause
A provision in a life insurance policy that limits the insurer's payout to a refund of premiums paid if the insured commits suicide within a specified period (usually two years) from the policy's issue date.
- Typically a 2-year exclusion period.
- If suicide occurs within the period, only premiums are refunded.
- If suicide occurs after the period, the full death benefit is paid.
- Designed to prevent individuals from purchasing life insurance with suicidal intent.
Memory trick: Policy provisions are the rules written in the scroll that protect both insurer and insured.