New Jersey Life Producer Practice Exam 2025 – Your Complete All-in-One Guide to Exam Success!

Question: 1 / 400

What amount is the insurance company obligated to pay the beneficiary if the insured dies during the grace period without having paid the annual premium?

The face amount

The face amount less the annual premium

When an insured individual passes away during the grace period of a life insurance policy without having paid the annual premium, the insurance company is still obligated to pay the face amount of the policy, but it will deduct the overdue premium from that amount. The grace period is a specified time after the premium due date during which the policy remains in force, providing coverage even if the payment has not been made.

Thus, if the insured dies during this time, the beneficiary will receive the face amount of the policy minus any outstanding premiums. This protects the policyholder's beneficiaries and ensures that they receive a benefit, albeit reduced by the amount of the unpaid premium. This policy feature is crucial as it prevents a lapse in coverage due to a missed payment, allowing for the preservation of benefits even under circumstances of non-payment within the grace period.

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The annual premium only

No payment is made

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