George forgot to pay his monthly life insurance premium that was due on March 1. The policy had a face value of $100,000. On March 21, George died. How much will the insurer pay George's beneficiary for this death claim, assuming the policy contained a standard grace period clause?

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Quizplus · Accepted Answer

The insurer will pay the beneficiary an amount equal to the face value of the policy, MINUS the overdue premiums and any interest or late penalties George owed them. This is because the policy had a standard grace period clause, which means that the policy does not lapse immediately if the premium is not paid on time. However, the insurer is entitled to deduct the unpaid premiums and any interest or late fees from the death benefit when a claim is made. Therefore, the beneficiary will receive the full face value of the policy minus the overdue premiums and any associated fees.

George Forgot to Pay His Monthly Life Insurance Premium That