Suicide Clause

The suicide clause in a life policy typically provides that, if suicide occurs within the first two years:

1. A.The insurer refunds premiums instead of paying the full benefitCorrect - premiums returned during the exclusion period.
2. B.The full benefit is always paidThis ignores the exclusion altogether. Within the period stated in the contract the insurer's obligation is deliberately limited, which is the entire reason the clause exists.
3. C.The benefit doublesDoubling is a feature of accidental death benefits, and a suicide is not an accident. This clause narrows what the insurer pays rather than enlarging it.
4. D.Nothing is ever paidThis overstates the consequence. The insurer is not relieved of everything; the premiums paid are returned, so a payment is made even though the face amount is not.

Why: During the suicide-exclusion period (usually two years), the insurer refunds premiums paid rather than the full death benefit.

The suicide clause in a life policy typically provides that:

1. A.Suicide is never addressedLife policies address it directly. The clause limits the insurer's exposure during an early stretch after issue, with the exact length set out in the contract.
2. B.Suicide within two years returns premiums, not the faceCorrect - the standard suicide exclusion period.
3. C.Suicide is always fully covered from day oneWould let someone buy coverage with that outcome already in mind. The clause instead carves out an initial period during which premiums are returned rather than the face amount paid.
4. D.The benefit triplesNo provision multiplies proceeds for this cause of death. The clause restricts what is payable early on rather than enlarging it.

Why: If the insured dies by suicide inside the policy's suicide-clause period, the insurer refunds premiums rather than paying the face amount. Most states set that period at two years, though some use one year, so the contract controls — two years is the figure exams test.

In 2019 Solveig bought a 250,000-dollar policy. In 2024 she increased the face amount to 600,000 dollars, with fresh underwriting on the 350,000-dollar increase. She dies by suicide in 2025. How does the insurer settle the claim?

1. A.It pays the full 600,000 dollars, because the suicide clause is measured from the original policy dateThis under-reads the rule. If the original date governed every later increase, an insured could add coverage and immediately claim on it.
2. B.It pays the full 600,000 dollars less the premiums paid on the increase, because a suicide clause may reduce a benefit but never eliminate itThere is no such partial rule. Within the suicide period the remedy is a return of premium for that coverage, not a discounted death benefit.
3. C.It pays the original 250,000 dollars in full and refunds only the premiums attributable to the 350,000-dollar increase, which is inside its own new suicide periodCorrect. Each underwritten layer carries its own suicide and contestable periods.
4. D.It denies the entire claim and refunds all premiums ever paid, because the 2024 underwriting created a new contractThis over-reads the rule. The 2024 change added a layer; it did not restart the clock on coverage that had been in force since 2019.

Why: The suicide and contestable clauses attach to each underwritten amount of coverage separately. The original 250,000 dollars has been in force since 2019, so its clauses have long expired and that amount is fully payable. The 350,000-dollar increase was newly underwritten in 2024 and carries its own suicide period, which the 2025 death falls inside, so the insurer's liability on that layer is limited to a refund of the premiums attributable to the increase. The clue is that the increase required new underwriting.