Rhode Island Life Insurance Practice Exam

If an insured dies during the grace period, what will the beneficiary receive?

1. No benefit is received

2. Full face amount with penalties

3. Full face amount minus any past due premiums

4. Only the past due premiums

The correct answer is: Full face amount minus any past due premiums

When an insured person passes away during the grace period, the beneficiary is entitled to receive the full face amount of the policy, but this amount is reduced by any premiums that were past due at the time of the insured's death. The grace period is a specific timeframe after a premium is due during which the policy remains in force, giving the insured a chance to make the overdue payment without losing the coverage. This is an important safeguard for policyholders, as it ensures that even if a premium is missed but paid during the grace period, the insurance will still provide the intended benefit. Therefore, the beneficiary receives the full face amount less any unpaid premiums, ensuring the financial responsibility of the insured is honored even after their passing. This provision helps maintain the integrity of life insurance policies and ensures that beneficiaries are compensated appropriately while accounting for any outstanding obligations.