A New Jersey life policy contains a suicide exclusion, and the insured dies by suicide midway through the exclusion period. What does the beneficiary receive under the standard formulation of that exclusion?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
A suicide exclusion in New Jersey life insurance practice limits the insurer's exposure only during a defined period — one that may not exceed two years from policy issue. If the insured dies by suicide within that period, the insurer's obligation is limited to returning the premiums paid; if death by suicide occurs after the period has run, the full face amount is payable to the beneficiary. The mechanism protects insurers against premeditated early-policy losses without stripping families of coverage in every other case. The New Jersey Department of Banking and Insurance supervises the use of such exclusions in policies sold in this state.
Why the other options are wrong
- A) Premium forfeiture is not the rule; within the exclusion period the insurer returns the premiums paid.
- B) A suicide exclusion is enforceable during its permitted period; only after that period does the full face amount become payable.
- C) The exclusion-period remedy is a premium refund, not a surrender-value calculation with penalties.
Memory hook
Suicide early: premiums back. Suicide after the period: face amount paid in full.