Question

11. The purpose of the suicide clause in a life insurance policy is to:

	1. Exclude payment of death proceeds for suicide only during the first one or two years of the policy, thus providing the insurer with protection against an insured who purchases a life insurance policy with the intention of committing suicide.
	2. Exclude all death benefits that result from suicide to discourage policy holders who might contemplate ending their lives.
	3. Enable the insurer to retain paid premiums if an insured commits suicide and the insurer denies the claim.
	4. Provide payment of death proceeds anytime during the policy period as a public service to the family members.

12. Which of the following describes the likely life insurance needs of a family

with two working spouses and dependent children?

	1. Life insurance on the spouse with a high income.
	2. Life insurance on both spouses.
	3. Life insurance on both spouses and the children.
	4. Life insurance on both spouses and school-age children.

Answer 1

1.The correct answer is option 1. This clause states that no death benefit will be paid if the insured commits suicide within two years of taking out a policy. Whenever an insured person replaces an existing life insurance policy with a new one, the time clock for the suicide clause is set back to zero and starts over again.

2. The correct answer is option 2. You need life insurance if you want to provide financial protection for your dependents in the event of your death. A business may want to use life insurance to fund its employee benefit plans, protect against the premature death of a keyperson or to provide for business continuation.