If Bob committed suicide before the two-year suicide clause expired, what will the insurer do with Bob's policy?

In the context of life insurance policies, the two-year suicide clause is a stipulation that typically states that if the insured commits suicide within the first two years of the policy, the insurer may not be obligated to pay the death benefit. Instead, the insurer usually refunds the premiums paid up to the time of death.

When a policyholder dies by suicide before this two-year period concludes, the insurance company often opts to return the premiums paid, rather than paying out the death benefit. The rationale behind this practice is to discourage individuals from taking out life insurance policies with the intent of committing suicide shortly thereafter to benefit their beneficiaries financially. By returning the premiums, the insurer avoids potential moral hazard issues.

Thus, in this case, since Bob's suicide occurred before the expiration of the two-year suicide clause, the correct response is for the insurer to return all paid premiums to the beneficiary. This approach aligns with standard practices in the life insurance industry regarding the treatment of suicide claims within the specified period.