Texas Life Agent Practice Exam

Which term describes the requirements for reinstating a life insurance policy?

1. Reinstatement conditions

2. Renewal requirements

3. Grace provision

4. Restoration guidelines

The correct answer is: Reinstatement conditions

The correct term for the requirements involved in reinstating a life insurance policy is "reinstatement conditions." Reinstatement is the process through which a lapsed life insurance policy can be brought back into force after it has expired due to non-payment of premiums. Reinstatement conditions typically include specific requirements that must be met by the policyholder, such as providing proof of insurability, paying any overdue premiums (and sometimes interest), and possibly submitting a reinstatement application within a specified time frame following the lapse. These conditions ensure that the insurer can adequately assess the risk of reinstating the policy based on the current health and circumstances of the insured. The other terms do not accurately capture this concept. "Renewal requirements" usually pertain to conditions for continuing a policy after it has reached its term, while "grace provision" refers to the allowed period following a missed payment during which coverage remains in effect before the policy lapses. "Restoration guidelines" is not a standard insurance term and may lead to confusion, as it does not specifically address the reinstatement of lapsed policies. Thus, reinstatement conditions is the most precise and correct term for what is needed to reactivate a lapsed life insurance policy.