State RegulationsFL specificDifficulty 2/5
A Miami policyowner's insured wife dies during the policy's grace period while a premium is overdue. How may the insurer settle the death claim?
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Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
Under Fla. Stat. 627.453, a Florida life policy stays in force during the grace period even though a premium is overdue. If the insured dies before the overdue premium is paid, the insurer must pay the death claim but may deduct the amount of the overdue premium together with interest at up to 8% per year. This is why an overdue premium never voids a death claim that occurs inside the grace window - the insurer settles the claim net of the debt.
Why the other options are wrong
- A) During the grace period the coverage remains in force, so the insurer cannot deny the claim solely because the last premium is unpaid.
- C) While the claim is payable, the statute allows the insurer to reduce the proceeds by the overdue premium and interest rather than paying with no deduction.
- D) The policy does not lapse during the grace period; lapsing it as of the due date would defeat the purpose of the 30-day minimum grace period.
Memory hook
Death in grace: the claim gets paid, minus the missed premium.