PSI Ohio Insurance Practice Exam

When the suicide clause is inserted in a life insurance contract, death by suicide is not covered during the policy's initial:

1. 1 year period.

2. 2 year period.

3. 3 year period.

4. 5 year period.

The correct answer is: 2 year period.

The inclusion of a suicide clause in a life insurance policy is a standard practice aimed at protecting insurers from potential moral hazards associated with those who might purchase life insurance with the intention of committing suicide shortly thereafter. The clause typically states that if the insured dies by suicide within a specified period, the insurance company will not pay the death benefit. In this context, the correct answer is the two-year period. Most life insurance policies have a suicide exclusion that lasts for two years from the policy's effective date. If the insured dies by suicide within this timeframe, the insurer is not liable to pay the death benefit. However, if the insured survives beyond this initial two-year period, the life insurance will cover the death, even due to suicide. This practice is put in place to encourage policies being taken out for genuine reasons and not for financial gain through premature death. The other options mention periods that are not standard for suicide clauses, making them incorrect in the context of typical life insurance contracts.