New York Insurance Exam Practice Question
What is the purpose of a policy's grace period?
Correct Answer: B
Rationale: A policy's grace period serves to allow policyholders the opportunity to make late premium payments without risking a lapse in coverage. This period typically lasts for 30 days, providing financial flexibility during times of difficulty.
Option A, increasing premiums, does not align with the grace period's purpose; it is focused on maintaining coverage rather than altering costs. Option C, waiving the death benefit, contradicts the intent of the grace period, which is to keep the policy active. Lastly, option D, canceling the policy, is the opposite of the grace period's function, which is to prevent cancellation due to missed payments.
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