What is the 'suicide clause' in life insurance?

The suicide clause limits the insurer's liability for suicide deaths during an initial exclusion period (typically 1 or 2 years from policy issue date). If suicide occurs during this period, the insurer returns the premiums paid (sometimes with interest) but does not pay the death benefit. After the exclusion period, suicide is treated as any other cause of death and the full benefit is paid. The provision exists because the insurer cannot reasonably price for the risk of someone purchasing insurance with the intention of suicide; the exclusion period removes this incentive. The clause is required in many state contracts and is a standard part of life insurance policies. The two-year period is more common in larger policies.