Identify a common exclusion found in life insurance policies.

Identify a common exclusion found in life insurance policies.

• A. Accidental death during the policy term
• B. Death due to suicide within the contestability period
• C. Death caused by natural disasters
• D. Death from serious illness after the grace period

Answer: (B)

One common exclusion found in life insurance policies is death due to suicide within the contestability period. Most life insurance contracts include a provision that limits the insurer's liability for claims related to suicide, typically for a designated period after the policy starts, often two years. If the insured dies by suicide during this contestability period, the insurance company may deny the claim, as this helps to prevent moral hazard and ensures that individuals are not purchasing life insurance solely with the intention of committing suicide shortly thereafter. This exclusion serves to safeguard insurers from potentially fraudulent claims while encouraging responsible planning for life insurance coverage.

One common exclusion found in life insurance policies is death due to suicide within the contestability period. Most life insurance contracts include a provision that limits the insurer's liability for claims related to suicide, typically for a designated period after the policy starts, often two years. If the insured dies by suicide during this contestability period, the insurance company may deny the claim, as this helps to prevent moral hazard and ensures that individuals are not purchasing life insurance solely with the intention of committing suicide shortly thereafter. This exclusion serves to safeguard insurers from potentially fraudulent claims while encouraging responsible planning for life insurance coverage.