New Jersey Life Producer Practice Exam

Question: 1 / 400

What is the "suicide clause" in a life insurance contract?

A provision that limits the payment of premiums after the insured has committed suicide

A provision that excludes payment of the death benefit if the insured commits suicide within a specified period from the policy's start

The "suicide clause" in a life insurance contract is a provision that specifies that if the insured commits suicide within a defined period, typically two years from the policy's effective date, the insurer will not pay out the death benefit. Instead, the insurer may only refund the premiums paid by the policyholder. This clause exists to prevent individuals from purchasing life insurance with the intention of committing suicide shortly thereafter to ensure a payout to beneficiaries. By having this exclusion period, insurance companies aim to mitigate moral hazard and ensure that the policy is serving its intended purpose of providing financial protection to beneficiaries in the event of an unexpected death, rather than being misused. This understanding of the clause’s function and intent is crucial for anyone working in life insurance and is often a key point of knowledge for life insurance producers.

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A clause that allows policy cancellation after a suicide attempt

A clause ensuring additional benefits for suicide deaths

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