What Is Suicide Clause? Definition

Why it matters

After the exclusion period ends, the policy pays the full death benefit in most cases. The length is often two years, but some states require one year. A reinstated policy may restart the clock. The clause protects carriers against buying coverage with a plan to harm oneself. If you or someone you know is in crisis, call or text 988.

Source: law.cornell.edu

Related terms

Contestability Period: The contestability period is the first two years after a policy starts, during which the carrier can review the application and deny a claim for a material misstatement. Many states set this limit.
Death Benefit: A death benefit is the money a life insurance carrier pays to the beneficiary when the insured dies. It is usually paid as a lump sum and is generally income tax free to the beneficiary.
Beneficiary: A beneficiary is the person or organization the policy owner names to receive the death benefit when the insured person dies. A policy can name one or several beneficiaries and can split the payout by percentage.
Reinstatement: Reinstatement is the process of restoring a lapsed life insurance policy to active status. The owner usually pays past-due premiums and may need to show the insured is still insurable.
Face Amount: The face amount is the dollar amount of coverage stated on the policy. It is the base death benefit the carrier agrees to pay, before any loans, riders, or reductions.

All 241 terms

Why it matters

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