Question

Susan was admitted to the hospital. She failed to pay her premium prior to admission, but is within the grace period. Under the unpaid premium provision the company is entitled to-

A. Deny the claim
B. Deduct the premium from the death benefit
C. Charge interest on the unpaid premium
D. Cancel the policy

Answer 1

The insurance company is entitled to deduct the unpaid premium from any claim payment when the policyholder is within the grace period.

Step-by-step explanation:

The question pertains to a situation where Susan has been admitted to the hospital and has not paid her insurance premium prior to admission, although she is still within the grace period.

According to the unpaid premium provision, in the scenario where a premium has not been paid, the insurance company is entitled to deduct the unpaid premium from any claim payment. This means that when Susan's hospital expenses are due for payment under her health insurance policy, the insurance company can reduce the amount payable by the amount of the premium Susan owes.

This practice is one of the ways insurance companies handle the recovery of unpaid premiums and ensure that policyholders are up-to-date with their payments.

Therefore, C. Charge interest on the unpaid premium is correct.