Life License Qualification Program (LLQP) Practice Exam

What is the purpose of the Suicide provision in a life insurance policy?

1. Decline an applicant who is contemplating suicide

2. Safeguard the insurer from certain applicants

3. Protect the insurer from ever paying claims due to suicide

4. Allow the insurer to pay a death benefit option

The correct answer is: Safeguard the insurer from certain applicants

The purpose of the Suicide provision in a life insurance policy is to safeguard the insurer from certain applicants. This provision typically specifies a period, usually two years, during which if the insured commits suicide, the insurer will not be liable to pay the death benefit. This restriction is put in place to mitigate the risk for the insurer, as it may be difficult to determine the applicant's mental health status or their intentions at the time of application. By including this provision, insurers can protect themselves from the potential for individuals to take out life insurance policies with the intention of committing suicide shortly thereafter. Essentially, it helps ensure that the coverage is not abused and that the life insurance system remains sustainable for consumers. The provision does not aim to decline applicants outright or to prevent claims forever; rather, it provides a specific timeframe during which the insurer can assess and manage the risk associated with suicide. After the waiting period, the insurer typically pays out the death benefit regardless of the cause of death, provided there is no evidence of fraud or other policy violations.