What is typically excluded from coverage in a life insurance policy?

Suicide within a certain period is typically excluded from coverage in a life insurance policy, usually referred to as the "suicide clause." Insurers often impose this exclusion to mitigate the risk associated with potential moral hazard, where individuals might be more inclined to seek life insurance if they are considering suicide. The period for this exclusion commonly ranges from one to two years from the date the policy is issued. If the policyholder dies by suicide during this timeframe, the insurer can deny the claim and return the premiums paid instead.

On the other hand, accidental death, natural causes, and terminal illnesses generally fall under different coverage categories in most life insurance policies. Accidental death is typically covered unless explicitly excluded. Natural causes are usually covered, as these are the most common circumstances under which people pass away. Terminal illnesses are also usually included, allowing policyholders access to benefits during their lifetime if they are diagnosed with a terminal condition, often under accelerated benefits provisions.