Life License Qualification Program (LLQP) Practice Exam

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Prepare for the Life License Qualification Program (LLQP) Exam with comprehensive quizzes and practice tests. Boost your knowledge with detailed explanations and expert study tips to confidently tackle your LLQP exam.

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What action does an insurer take if a Term Life policyholder dies after not making the required premium payment?

Claim will be denied
Claim will be paid in full
Claim will be partially paid
Claim will be decided by an arbitrator

The correct answer is: Claim will be denied

When a Term Life policyholder passes away after failing to make the required premium payment, the insurer typically denies the claim. This is because life insurance contracts are contingent upon the policy being in force at the time of death. If the premium has not been paid, it may result in the policy lapsing, meaning that the coverage is no longer effective. Insurers require that premiums be paid on time to keep the policy active; therefore, in the event of the policyholder's death after a missed payment, the insurer is not obligated to pay out the death benefit. This underscores the importance of maintaining up-to-date premium payments to ensure coverage remains intact. Other outcomes, such as partial payment or referral to an arbitrator, do not apply in this scenario as they hinge on circumstances that differ from the clear lapse of coverage due to non-payment.