A California life policy is issued on January 1, 2024. The insured dies by suicide on June 1, 2025 (17 months after issue). Under the standard California suicide clause, the insurer's typical action is:
Explanation
California Insurance Code §10113.1 allows a life insurance policy to exclude suicide as a covered cause of death only during the first 2 policy years. If the insured commits suicide within that 2-year exclusion period, the insurer's liability is limited to a refund of premiums paid (less indebtedness). After the 2-year exclusion period, suicide IS a covered cause and the full death benefit is paid. Here, 17 months after issue is within the exclusion window, so option C — premium refund — is correct. Option A would apply only AFTER the 2-year exclusion. Option B is too harsh — premiums are refunded, not forfeited. Option D — California law does not authorize partial death benefit; it's a binary refund-or-pay rule.
Law Reference: Cal. Ins. Code §10113.1 (suicide clause)Practice all 315 questions free — no signup required.
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