Final answer:
The purpose of the Grace Period clause is to avoid an unintentional lapse of a life insurance policy.
Step-by-step explanation:
The purpose of the Grace Period clause is to avoid an unintentional lapse of a life insurance policy. This clause allows policyholders a period of time after the premium due date to make the payment without any penalty or loss of coverage.
During this grace period, the insurance company will continue to provide coverage as long as the premium payment is made within the specified timeframe. If the payment is not received within the grace period, the policy may lapse and the insured may lose their coverage.
For example, if a policyholder has a monthly premium due on the 1st of each month, the grace period may be set at 30 days. This means the policyholder has until the 30th of the month to make the payment without consequences.