South Carolina Life and Health Practice Exam

Under what condition might a life insurance company refuse to pay a claim related to a suicide?

1. Within the first year of the policy

2. Within two years of the policy

3. Upon renewal of the policy

4. At the request of the beneficiary

The correct answer is: Within two years of the policy

A life insurance company may refuse to pay a claim related to suicide if it occurs within a specified period after the policy is issued, which is typically two years. This provision is often included to prevent individuals from purchasing life insurance with the intent to commit suicide shortly thereafter, as a means of providing financial gain to beneficiaries. During this period, known as the suicide clause, the insurer has the right to deny a claim if the insured takes their own life. This two-year window is intended to protect both the insurance company and the principle of insurability while ensuring that individuals are not incentivized to take detrimental actions. After the two-year period, claims for suicide are generally valid, reflecting the insurance company’s acceptance of the insured’s risk once sufficient time has passed. In contrast, suicide claims made within the first year are typically viewed as more suspicious, but the established period for denial is primarily two years as most standard policies reflect this.