Washington Life Producer Practice Exam

If an insured dies during the grace period without any premiums paid, what will happen to the policy?

1. The policy would be voided entirely

2. The policy would be payable, minus the premium amount

3. The policy would remain in force with a full payout

4. The beneficiary will receive the last premium amount only

The correct answer is: The policy would be payable, minus the premium amount

When an insured dies during the grace period without having paid any premiums, the policy will still provide a benefit to the beneficiary, but it will be adjusted to account for the missed premium. This means that the claim amount will be reduced by the amount of the unpaid premium since the policy remains in force only during the grace period. The grace period is a specified duration after a premium due date during which the policyholder can still pay the premium and keep the policy active. If the insured passes away during this period, the insurer allows a claim but deducts any outstanding premiums from the benefit. This approach protects both the insurer and the beneficiary, ensuring that the insured's policy does not result in a complete loss due to non-payment while also recognizing that premiums are necessary for full coverage. Thus, the correct choice reflects the policy’s provision to cover the insured's death despite the absence of a premium payment, while also considering the financial responsibilities tied to maintaining the policy's validity.