What is the provision called that allows a policy to stay in force when a premium is paid late?

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Study for the Louisiana Series 103 – Life, Health, and Accident or Sickness Insurance Exam. Familiarize yourself with key concepts through engaging questions and explanations. Prepare effectively for your exam!

Multiple Choice

What is the provision called that allows a policy to stay in force when a premium is paid late?

Explanation:
Grace period is the provision that keeps a life insurance policy in force for a set time after the due date, giving a late payment a chance to be made without immediately ending coverage. Typically about 30 days, the policy remains active during this window. If death occurs during the grace period, the death benefit is paid minus any overdue premium. If the overdue amount isn’t paid by the end of the grace period, the policy lapses unless the insured later reinstates it under the reinstatement rules.

Grace period is the provision that keeps a life insurance policy in force for a set time after the due date, giving a late payment a chance to be made without immediately ending coverage. Typically about 30 days, the policy remains active during this window. If death occurs during the grace period, the death benefit is paid minus any overdue premium. If the overdue amount isn’t paid by the end of the grace period, the policy lapses unless the insured later reinstates it under the reinstatement rules.

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