An insured in Massachusetts dies after the grace period on her life policy has run and the policy has lapsed, with no reinstatement ever requested. What is the correct outcome?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
The grace protection of M.G.L. c. 175, § 132(1) lasts 30 days. Once that window closes with the premium unpaid, the policy lapses and no death coverage remains. The statutory route back to coverage is reinstatement under M.G.L. c. 175, § 132(11), which requires evidence of insurability and payment of the arrears with interest — and no reinstatement was ever sought here. The expired grace period and the expired incontestability period answer different questions: one about whether coverage exists, the other about whether the insurer may challenge misstatements under M.G.L. c. 175, § 132(2).
Why the other options are wrong
- A) The arrears deduction applies only to deaths within the 30-day grace period; after lapse there is no coverage to reduce.
- C) Incontestability under M.G.L. c. 175, § 132(2) limits contests based on misstatements; it never creates coverage for a lapsed policy.
- D) A cash surrender value is a living policyowner's nonforfeiture election under M.G.L. c. 175, § 144, not a benefit that passes to a beneficiary on a lapsed policy.
Memory hook
Grace shelters thirty days; after that, only reinstatement revives the contract.