The correct answer is: B. The claim will be paid subject to policy conditions.
A grace period is a period of time after the premium due date during which the policyholder can pay the premium without penalty. If the policyholder dies within the grace period, the claim will be paid subject to the policy conditions. This means that the insurer will review the policy to determine if there are any reasons why the claim should not be paid. For example, if the policyholder had a pre-existing condition that was not disclosed to the insurer, the claim may be denied.
Option A is incorrect because the claim will not always be rejected. If the policyholder dies within the grace period and the policy conditions are met, the claim will be paid.
Option C is incorrect because the premium is not deducted from the claim amount. The full claim amount is paid to the beneficiary.
Option D is incorrect because the claim will be paid subject to the policy conditions.