Marcus purchased a $500,000 permanent life insurance policy 14 months ago. Unfortunately, he takes his own life. What is the insurer's primary obligation in this scenario?

Question: Marcus purchased a $500,000 permanent life insurance policy 14 months ago. Unfortunately, he takes his own life. What is the insurer's primary obligation in this scenario?

Answer options:

• The full face amount of the policy is paid to the beneficiary. ✅ The insurer refunds the premiums paid to the beneficiary or the estate.
• The insurer pays 50% of the face amount as a compassionate settlement.
• The insurer is not required to pay anything, including premiums.

Correct answer: The insurer refunds the premiums paid to the beneficiary or the estate.

Explanation: Under the suicide clause, if the life insured commits suicide within two years of the policy's effective date, the insurer is not liable to pay the death benefit. Instead, they refund the premiums paid without interest.