How much will the insurer pay if T commits suicide after taking out a $50,000 life insurance policy?

How much will the insurer pay if T commits suicide after taking out a $50,000 life insurance policy?

• A. $25,000
• B. $50,000
• C. $0
• D. $75,000

Answer: (B)

In the context of life insurance policies, many have clauses that address situations involving suicide. Typically, these policies include a suicide provision that states if the insured commits suicide within a specific period after the policy is issued, the payout may be limited. This period is often two years. If T commits suicide after the policy has been in force for longer than this contestable period, the insurer is obligated to pay the full face value of the policy, which in this case is $50,000, as long as the policy remains in good standing and premiums have been paid. The reasoning is that after the contestable period, the insurer cannot deny a claim based on the reason for death, as the risk has already been accepted. Conversely, if T's suicide occurred during the contestable period, the payout may be reduced or eliminated entirely depending on the specific terms of the policy, which is why some of the other options might suggest varying payout amounts. However, without any indication that the policy’s specific terms have that limitation or that the suicide occurred during the contestable period, the standard practice would be to pay the full face amount of the policy. Thus, in this scenario where T committed suicide after the policy was effective beyond the contestable

In the context of life insurance policies, many have clauses that address situations involving suicide. Typically, these policies include a suicide provision that states if the insured commits suicide within a specific period after the policy is issued, the payout may be limited. This period is often two years.

If T commits suicide after the policy has been in force for longer than this contestable period, the insurer is obligated to pay the full face value of the policy, which in this case is $50,000, as long as the policy remains in good standing and premiums have been paid. The reasoning is that after the contestable period, the insurer cannot deny a claim based on the reason for death, as the risk has already been accepted.

Conversely, if T's suicide occurred during the contestable period, the payout may be reduced or eliminated entirely depending on the specific terms of the policy, which is why some of the other options might suggest varying payout amounts. However, without any indication that the policy’s specific terms have that limitation or that the suicide occurred during the contestable period, the standard practice would be to pay the full face amount of the policy.

Thus, in this scenario where T committed suicide after the policy was effective beyond the contestable