Texas Life Agent Practice Exam

If a client dies by suicide 6 months after purchasing a life insurance policy, what will the insurance company most likely do?

1. Pay the full claim

2. Deny the claim but refund the premium

3. Provide partial benefits

4. Extend the coverage period

The correct answer is: Deny the claim but refund the premium

When a client purchases a life insurance policy, there is typically a contestability period during which the insurer can investigate and potentially deny a claim based on the circumstances of the insured's death. In Texas, this contestability period usually lasts for two years. If a policyholder dies by suicide within six months of purchasing the policy, the insurance company is most likely to deny the claim due to the specific exclusions often included in life insurance contracts regarding suicide. However, many insurers will also reflect a commitment to customer service and ethical practices by returning the premiums paid to the beneficiary. This approach offers a sense of restitution to the beneficiaries while acknowledging the policy's exclusion for suicide during this early period. The scenario reflects a standard industry practice that aims to balance policy intent with the realities of underwriting risk. Understanding this aspect of life insurance policies helps emphasize the importance of reviewing specific policy terms and conditions related to suicide and other exclusions.