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 falls inside the exclusion window, so refunding the premiums paid less policy loans and dividends is correct. Paying the full death benefit would be right only AFTER the 2-year exclusion has run; the assertion that California never permits a suicide exclusion at all is simply wrong. Denying the claim entirely and keeping all premiums is too harsh — premiums are refunded, not forfeited. And paying 50% of the death benefit as a statutory compromise has no basis; California law does not authorize a partial death benefit, it is a binary refund-or-pay rule.