Under the suicide clause, if suicide occurs within the specified period from inception, the insurer is liable for which of the following?

• A. Return of premiums paid with interest
• B. Minus indebtedness and without interest
• C. Full refund of premiums paid
• D. Policy remains in force with full benefits

Answer: (B)

The key idea is how the suicide clause limits liability in the early period after the policy starts. If death by suicide happens within the specified period, the insurer isn’t liable for the full death benefit. Instead, it pays the premiums that have been paid into the policy, minus any outstanding indebtedness on the policy, and there is no interest paid on those premiums. This reflects the protection for the insurer against a quick purchase followed by suicide, while still returning what the policyholder has paid, less any loans against the policy’s cash value.

So, the best choice is the one stating the amount returned is premiums paid minus any indebtedness, with no interest. The other options don’t fit the usual rule: paying full face value or paying with interest would defeat the purpose of the clause, and keeping the policy in force with full benefits ignores the limited liability during the suicide period.