South Carolina Life and Health Practice Exam

During which time period will an insurer accept a late premium and continue coverage in full force?

1. Renewal period

2. Grace period

3. Coverage period

4. Policy review period

The correct answer is: Grace period

The correct choice is the grace period because it is the specific timeframe during which an insurer allows a policyholder to pay a late premium without losing coverage. Typically, the grace period lasts for a specified number of days after the premium due date, during which the policy remains in force despite non-payment. If the premium is paid within this period, the coverage continues uninterrupted. This provision is designed to protect policyholders from accidentally losing their insurance coverage due to a missed payment. The other options do not serve the same purpose. The renewal period refers to the time frame when a policy is up for renewal and may involve different conditions. The coverage period signifies the entire length of time a policy is active or providing coverage, not a specific allowance for late payments. The policy review period usually pertains to a timeframe for assessing or re-evaluating coverage rather than dealing with premium payment issues. Thus, the grace period is uniquely defined for situations involving late premium payments while maintaining coverage.