California Life-Only & Accident and Health AgentCalifornia Law - Life and Accident & HealthMedium
A life insurance policy has lapsed due to non-payment of premiums. To reinstate the policy, the insured must typically do all of the following EXCEPT:
- APay all overdue premiums with interest.
- BPay back any outstanding policy loans.
- CProvide evidence of insurability.
- DSubmit a new application and undergo a new waiting period.
Show answer & explanationAnswer & explanation
Correct answer: D. Submit a new application and undergo a new waiting period.
Reinstatement allows a lapsed policy to be restored to its original status, usually within a specified timeframe (often 3-5 years), by paying back premiums with interest and proving insurability. Submitting a new application and undergoing a new waiting period would be like applying for a brand new policy, not reinstating an old one.
Why the other options are wrong
- A. Paying overdue premiums with interest is a standard requirement for reinstatement.
- B. Outstanding policy loans must generally be paid or reinstated to restore the policy to good standing.
- C. Evidence of insurability is typically required to ensure the insured's health hasn't significantly deteriorated.
Life Policy Reinstatement
Reinstatement allows a lapsed life insurance policy to be reactivated, typically requiring payment of overdue premiums (with interest) and evidence of insurability.
- Usually a time limit (e.g., 3-5 years) for reinstatement.
- Original policy terms and benefits are restored.
- Prevents the need for a completely new policy.
Memory trick: Reinstatement: back to old, but pay and prove.