Uniform Optional Provisions: Which provision covers a claim when a portion of the premium is past due and the insurer pays only a partial claim?

• A. Unpaid Premium
• B. Grace Period
• C. Reinstatement
• D. Misstatement of Age

Answer: (A)

When a premium is overdue, the Unpaid Premium provision specifically allows the insurer to deduct the amount of the overdue premium from the claim payment. This means the beneficiary receives only the portion of the benefit that remains after subtracting the unpaid premium. For example, if the death benefit is $100,000 and $10,000 in premiums is unpaid, the payout would be $90,000. This provision ensures that benefits aren’t paid in full while premiums aren’t being collected.

The other provisions don’t address this exact situation. The Grace Period extends the time to pay after the due date but doesn’t by itself describe reducing a claim by unpaid premiums. Reinstatement covers restoring a lapsed policy after a lapse due to nonpayment, not handling partial claim payments. Misstatement of Age deals with adjusting the benefit to reflect the insured’s correct age, not about withholding part of a claim due to unpaid premiums.