State RegulationsMA specificDifficulty 2/5
A Massachusetts insured dies during the grace period with the premium still unpaid. Under M.G.L. c. 175, § 132(1), how is the death claim handled?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.G.L. c. 175, § 132(1) keeps the life policy in force throughout the 30-day grace period, so an insured who dies during that window is covered. The statute conditions the payment on deducting the overdue premium, plus the optional interest of no more than 6% per annum the insurer is allowed to charge. The beneficiary therefore receives the proceeds minus the arrears rather than nothing — and nothing is what happens only after grace has expired and the policy has lapsed.
Why the other options are wrong
- A) During the grace period the policy remains in force by statute; denial for nonpayment becomes possible only after the period runs out.
- B) The statute does not forgive the arrears; the insurer deducts the overdue premium and allowed interest from the proceeds.
- D) A nonforfeiture benefit belongs to the policyowner's election while living; the death claim during grace is paid as reduced proceeds.
Memory hook
Death in grace still pays — Massachusetts just subtracts the arrears.