What is a suicide clause in a life insurance policy?

A suicide clause is a specific provision included in a life insurance policy that typically denies the death benefit payout if the insured dies by suicide within a specified period, often the first two years of the policy. This clause exists to prevent adverse selection, which occurs when individuals purchase life insurance when they know they are likely to commit suicide. Insurance companies include this provision to safeguard their finances and maintain the overall integrity of the policyholder pool.

If the insured takes their own life after the specified period, the basic death benefit would generally be paid, but during the stipulated timeframe, the claim could be denied. This helps both the insurer and the insured, as it establishes clarity around coverage during a vulnerable and critical time. The other options presented do not accurately represent the intent and function of the suicide clause. For example, provisions that would pay double benefits or contest claims after suicide do not reflect standard practices found in life insurance policies.