Rhode Island Life Insurance Practice Exam

What is typically the outcome if an insured individual dies by suicide within the policy's suicide period?

1. No payout is made

2. Full policy benefits are paid

3. Only partial benefits are paid

4. Benefits are paid to the policyholder's estate

The correct answer is: No payout is made

If an insured individual dies by suicide within the policy's suicide period, which is usually defined as the first two years of the policy, the outcome is that no payout is made. This provision is included to prevent insurance fraud, as it ensures that individuals cannot take out a life insurance policy and then immediately benefit from it through a suicide claim. Insurers typically have a waiting period during which they will not pay out for suicides to mitigate this risk. Once the suicide period has elapsed, if the insured dies by suicide, the full policy benefits can be claimed. This structure is designed to encourage the responsible use of life insurance and to provide coverage for long-term policyholders without encouraging opportunistic behavior.