What is the purpose of a suicide clause in a life insurance policy?

A suicide clause in a life insurance policy is primarily designed to exclude coverage for death by suicide within a specified period, usually the first two years of the policy. This provision helps protect the insurance company from potential abuse of the policy by individuals who might purchase insurance with the intent of committing suicide shortly thereafter, thereby ensuring that the company does not face significant financial losses.

During the specified period, if the insured dies by suicide, the policy typically will not pay out the death benefit, although premiums may still be refunded. Once that period has passed, coverage for suicide is typically reinstated, reflecting the understanding that such acts can often be linked to mental health issues that may not have been present at the time of purchasing the policy.

Other choices do not accurately reflect the function of the suicide clause. The clause does not provide additional benefits after suicide, nor does it limit premium increases or specifically encourage mental health evaluations. Its main purpose is to set a timeframe during which death by suicide is excluded from the policy coverage.