State RegulationsAZ specificDifficulty 2/5
A Mesa insured lets a life premium become overdue but dies within the grace period before paying it. Under A.R.S. 20-1203, the insurer:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A.R.S. 20-1203 keeps life coverage in force throughout the grace period, so a death during grace is still a covered claim. The statute expressly lets the insurer deduct the overdue premium from the claim payment, which is the practical settlement mechanism when the insured dies before catching up the missed premium.
Why the other options are wrong
- B) lapsing the coverage at the due date contradicts the grace-period protection.
- C) payment is not conditioned on the beneficiary tendering the overdue premium first.
- D) a paid-up reduction is a nonforfeiture option, not the grace-period rule.
Memory hook
Died in grace? Paid, minus the premium.