Texas General Lines — Life, Accident, Health and HMOTexas Statutes and Rules Specific to Life InsuranceEasy
A life insurance policy issued in Texas includes a provision stating that if the insured commits suicide within two years of the policy's issue date, the insurer will only pay the premiums paid, without interest. After 18 months, the insured dies by suicide. What amount will the beneficiary receive?
- AThe premiums paid, less any outstanding loans.
- BThe premiums paid, without interest.
- CNothing, as suicide within two years voids the policy.
- DThe full death benefit.
Show answer & explanationAnswer & explanation
Correct answer: B. The premiums paid, without interest.
Texas law mandates a suicide clause in life insurance policies. If the insured commits suicide within two years of the policy's issue date, the insurer's liability is limited to the return of premiums paid, without interest.
Why the other options are wrong
- A. Loans are typically deducted from the death benefit, but in this case, only premiums are returned.
- C. The policy is not voided; rather, the payment is restricted to the premiums paid.
- D. The full death benefit is paid if suicide occurs after the two-year exclusion period.
Suicide Clause (Texas)
A standard provision in Texas life insurance policies limiting the insurer's liability to a return of premiums paid, without interest, if the insured commits suicide within two years of the policy's issue date.
- Mandated by Texas law.
- Typically a two-year exclusion period.
- Applies to life insurance policies.
Memory trick: Suicide's short window, premiums are all you've got.