If the insured dies during the grace period, what is the insurer required to do?

When the insured dies during the grace period, the insurer is required to pay the death benefit but will typically deduct any due premiums along with any applicable interest. The grace period serves as a protection for the policyholder by allowing a specified time frame after the premium due date during which coverage continues, despite non-payment of the premium. If a claim arises during this grace period, the insurance company fulfills its obligation by paying out the death benefit in full, but since the premium was unpaid, it is customary to deduct that outstanding amount along with any interest accrued.

This approach ensures that the insurer can maintain its financial integrity while still honoring its commitment to the policyholder and their beneficiaries. Therefore, the correct response accurately reflects the insurer's requirement to balance its duties with the financial realities tied to outstanding premium payments.