What is the statutory exclusion clause?
The statutory clause varies in each state. It provides that insurers must pay death benefits in the event of the insured’s suicide after a certain period of time has elapsed since purchasing the policy. This is the contestable period. Most states have a two year exclusion period. Some provide only one year. The clause in the policy says something like this: “If the insured shall commit suicide while sane or insane within two years from the date of issue hereof, the liability of the company under this policy shall be limited to the premiums actually paid hereon less any indebtedness” Generally, the insurer will refund premiums paid if suicide takes place within the exclusion period. Interest is not usually returned. If the suicide occurs after the exclusion period, then the death benefit will be distributed, provided no other exclusions apply (such as premiums not having been paid).
