[G026]

grace period

An amount of time (usually one month) after the life insurance policy's premium due date, during which the policy continues in effect when the premium due is not paid. Many policies which have cash values also provide an automatic premium loan provision, in which part of the cash value is used as a loan to pay the premium due, thereby keeping the policy in force for a longer period. Most state laws require a grace period in life insurance policies.

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