Which provision resulted in this deduction: a claim payment is reduced due to overdue premiums?

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

Answer: (C)

When premiums are not paid, the policy can include a clause that allows the insurer to offset the amount of unpaid premiums against a claim payment. This is the unpaid provision. It explicitly provides that the claim benefit paid to the insured (or beneficiaries) will be reduced by any premiums that remain unpaid, so the insurer recovers what is due before the remaining benefit is paid.

The grace period is simply the extra time after a due date to pay without lapse; it keeps coverage in force, but doesn’t automatically determine how a claim is settled unless there are outstanding premiums during that period. Misstatement of age affects the amount based on age information, not on unpaid premiums.