Tennessee Life Producer Practice Exam

If T commits suicide five years after taking out a $50,000 life insurance policy with an Accidental Death and Dismemberment rider, how much will the insurer pay?

1. $0 - Suicide is excluded

2. $25,000 - Half the policy amount

3. $50,000 - Outside the suicide clause period

4. $100,000 - Double indemnity clause applies

The correct answer is: $50,000 - Outside the suicide clause period

The insurer will pay $50,000 in this situation because the suicide occurred outside the typical exclusion period defined in most life insurance policies. Generally, life insurance policies include a suicide clause which stipulates that if the policyholder dies by suicide within a specific time frame—often two years from the policy's issuance—the death benefit will not be paid out. However, since T committed suicide five years after obtaining the policy, this timeframe has elapsed, and the insurer is bound to pay the full face value of the life insurance policy, which is $50,000. The presence of the Accidental Death and Dismemberment rider does not affect the payout in this case, since the rider typically covers only accidental deaths or injuries rather than deaths by suicide. Therefore, the full benefit under the life insurance policy will be payable to the beneficiaries.