The suicide clause is in effect for how long?

The suicide clause in life insurance policies typically stipulates that if the insured person dies by suicide within a specific time frame from the policy's effective date, the insurer will not pay the death benefit. This duration is usually set at two years. The rationale behind this clause is to prevent individuals from taking out a policy with the intention of committing suicide shortly thereafter to provide financial benefit to their beneficiaries. By having this two-year period, insurers aim to reduce moral hazard and ensure that the policy is held with the intention of long-term protection rather than short-term financial benefit.

In practical application, if a policyholder were to pass away by suicide within the initial two years, the insurance company would typically return any premiums paid but would not provide the full death benefit. After this period, the coverage would be in full effect, and the beneficiaries would be eligible to claim the death benefit regardless of the circumstances of the insured's death. This policy structure reflects the life insurance industry's commitment to long-term contracts and the intention of policyholders.