How does a suicide clause affect life insurance policies?

• A. It guarantees full payment regardless of circumstances
• B. It states no death benefit is paid if the insured dies by suicide within a specific period
• C. It increases the premiums significantly
• D. It provides additional benefits only to suicide victims

Answer: (B)

A suicide clause within life insurance policies is designed to address a sensitive issue: the potential for someone to take their own life shortly after purchasing a life insurance policy. The correct understanding of this clause is that it specifies a period—usually the first two years of the policy—where no death benefit will be paid if the insured dies by suicide. This provision is intended to prevent insurance fraud, where individuals might buy a policy with the intent of committing suicide in order to provide a financial benefit to their beneficiaries.

By including a suicide clause, insurers aim to mitigate the financial risk associated with sudden and intentional death and encourage policyholders to seek help if they are struggling with mental health issues. After the specified period has elapsed, if the insured commits suicide, the death benefit is typically paid out to the beneficiaries. This reflects a broader industry understanding that after this time frame, the risk of suicide is not the primary concern for the insurer, and they are willing to honor the policy in accordance with the original purpose of providing financial protection.

Other options do not accurately reflect the fundamental nature of suicide clauses. For instance, the notion that it guarantees full payment regardless of circumstances is incorrect as the clause specifically addresses a scenario where coverage may be temporarily denied. Similarly, the idea that