Which of the following is considered an exclusion in life insurance policies?

In life insurance, exclusions refer to specific conditions or circumstances under which the insurer will not pay out the death benefit. One major exclusion is suicide, especially if it occurs within a stipulated time frame after the policy has been issued. Many life insurance policies include a suicide clause that states if the insured takes their own life within the first two years of the policy, the insurer will not be liable to pay benefits. This provision is designed to prevent moral hazard where individuals might take out a large insurance policy with the intent to commit suicide shortly thereafter.

In this context, death due to natural causes, accidental death, and terminal illness do not constitute exclusions. Death from natural causes is generally covered, accidental death is typically included in standard coverage, and terminal illness riders can even provide benefits prior to death. The specific time frame for the suicide exclusion is important, reinforcing the insurance industry's aim to discourage individuals from viewing insurance as a means of financial gain in the event of suicide.