CARD Q082
An individual health policy provides a 10-day grace period for renewal premiums. The premium is unpaid when the insured suffers an otherwise covered illness on day 6 of that period. What is the status of coverage?
- It is suspended until the overdue premium is paid
- It lapsed on the premium due date
- It resumes only after reinstatement is approved
- It remains in force during the grace period
It remains in force during the grace period
A grace period keeps coverage in force while allowing extra time to pay an overdue renewal premium. It is not a lapse followed by reinstatement. This policy specifies 10 days; grace-period lengths vary with the policy and governing rules.
Why each choice is right or wrong
A. It is suspended until the overdue premium is paid
Incorrect. Coverage is not generally suspended merely because payment remains due during this stated grace period.
B. It lapsed on the premium due date
Incorrect. The grace provision prevents immediate lapse on the due date.
C. It resumes only after reinstatement is approved
Incorrect. Reinstatement addresses lapsed coverage; the policy is still in its grace period.
D. It remains in force during the grace period
Correct. A grace period keeps coverage in force while allowing extra time to pay an overdue renewal premium. It is not a lapse followed by reinstatement. This policy specifies 10 days; grace-period lengths vary with the policy and governing rules.
Review the related terms
Use these lessons to revisit the concepts and try additional practice questions.