Florida 2-15 Life, Health and Variable Annuity AgentGeneral Knowledge of Life InsuranceEasy
A life insurance policy states that if the insured commits suicide within two years of the policy's issue date, the insurer will only return the premiums paid. This provision is known as the:
- AGrace Period
- BSuicide Clause
- CReinstatement Clause
- DIncontestability Clause
Show answer & explanationAnswer & explanation
Correct answer: B. Suicide Clause
The suicide clause is a standard life insurance policy provision that limits the insurer's liability if the insured dies by suicide within a specified period (typically two years) from the policy's issue date, usually resulting in a return of premiums paid.
Why the other options are wrong
- A. The grace period allows the policyholder extra time to pay a premium before the policy lapses.
- C. The reinstatement clause allows a lapsed policy to be restored under certain conditions.
- D. The incontestability clause prevents the insurer from denying a claim due to misstatements after a certain period, not suicide.
Suicide Clause
A provision in a life insurance policy that states if the insured commits suicide within a specified period (usually two years) from the policy's issue date, the insurer's liability is limited to a return of premiums paid.
- Standard policy provision
- Typically a two-year exclusion period
- If suicide occurs within the period, premiums paid are returned
- If suicide occurs after the period, the full death benefit is paid
Memory trick: Don't try suicide; the clause will deny the full ride.