State RegulationsNY specificDifficulty 2/5
An insured dies while his New York life policy is within its grace period, and the overdue premium has not been paid. The insurer will:
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under N.Y. Ins. Law §3203(a)(1), the policy remains in force during the grace period, so a death within grace is a covered claim. The insurer pays the death benefit but may deduct the overdue premium from the proceeds — the statutory compromise that keeps coverage alive during grace while protecting the insurer's premium.
Why the other options are wrong
- A) The policy remains in force during the grace period under §3203(a)(1), so the claim is covered rather than denied.
- B) The beneficiary of a deceased insured does not reinstate the policy; death during grace is covered subject only to the premium deduction.
- C) Because the policy is in force, the death benefit — not the cash value — is payable, minus the overdue premium.
Memory hook
Death in grace: pay the claim, dock the overdue premium.