Life & Health Insurance Exam (National Portion)Life InsuranceMedium
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 is an example of which policy provision?
- AReinstatement Clause
- BIncontestability Clause
- CSuicide Clause
- DMisstatement of Age or Sex Clause
Show answer & explanationAnswer & explanation
Correct answer: C. Suicide Clause
The Suicide Clause is a standard life insurance provision 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 refund of premiums paid, without interest.
Why the other options are wrong
- A. The Reinstatement Clause allows a lapsed policy to be put back in force under certain conditions.
- B. The Incontestability Clause prevents the insurer from denying a claim for misrepresentation after a certain period, usually two years, but does not apply to suicide.
- D. The Misstatement of Age or Sex Clause allows the insurer to adjust the death benefit or premiums if the insured's age or sex was misstated.
Suicide Clause
A provision in a life insurance policy that limits the insurer's liability to a refund of premiums paid if the insured commits suicide within a specified period (usually one or two years) from the policy's issue date.
- Typically a 2-year exclusion period.
- If suicide occurs within the period, only premiums are returned.
- If suicide occurs after the period, the full death benefit is paid.
- Designed to deter individuals from purchasing policies with the intent of suicide.
Memory trick: Policy rules: who, what, when, and how claims are handled.