New Jersey Life Producer Practice Exam

Question: 1 / 400

What can policyholders expect to happen if they fail to make premium payments?

The insurer will provide a grace period of typically 30 days before lapsing the policy

When a policyholder fails to make premium payments, it is standard practice for insurers to provide a grace period, typically lasting around 30 days. During this grace period, the policy remains in force, allowing the policyholder time to catch up on payments without instantly losing coverage. This grace period is a regulatory requirement for many types of insurance policies, as it serves to protect policyholders from immediate lapses in insurance due to unintentional non-payment.

This provision is designed to ensure that policyholders have an opportunity to make their payments and continue their coverage, rather than facing an immediate termination of the policy. Once the grace period expires, if the premium has not been paid, the insurer may then choose to lapse the policy, resulting in a loss of coverage.

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All premiums paid will be refunded in full

The policyholder will be able to continue coverage without payment adjustments

The policy will remain active indefinitely regardless of payment status

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