Utah Life Producer Practice Exam

A common exclusion in an insurance policy is often related to self-inflicted harm, such as suicide. In many life insurance policies, there is typically a provision that states if the insured dies by suicide within a specified period, often the first two years of the policy, the death benefit may not be payable. This exclusion is designed to prevent potential abuse of the policy by individuals who may purchase insurance with the intent to commit suicide shortly thereafter for the purpose of their beneficiaries receiving a payout.

The rationale behind this exclusion lies in the insurance principle that requires a legitimate insurable interest and a genuine intent to protect against unforeseen events. By excluding suicides during this initial period, insurers mitigate the risk of moral hazard, where the policyholder may intentionally end their life for financial gain.

In contrast, accidental death, natural disasters, or injuries during holidays typically do not fall under standard exclusions and might be covered by most life insurance policies, though they can depend on specific circumstances or additional riders. Thus, the exclusion of suicide within the first two years is a common and recognized aspect of life insurance policies.