Washington Life Producer Practice Exam

In order to activate the reinstatement clause of a lapsed life insurance policy, the insured MUST?

1. Submit a new application

2. Provide evidence of insurability

3. Pay premiums for the current year

4. Choose a new beneficiary

The correct answer is: Provide evidence of insurability

The reinstatement clause of a lapsed life insurance policy allows the insured to restore their policy after it has lapsed, usually due to non-payment of premiums. To activate this clause, the insured is typically required to provide evidence of insurability. This is essential because the insurer needs to assess the risk associated with reinstating the coverage. Since there might have been changes in the insured's health or circumstances during the period that the policy was lapsed, this evidence helps the insurance company determine whether they are willing to reinstate the coverage under the same terms or if adjustments need to be made. Providing evidence of insurability can include submitting medical information or undergoing a medical examination, which reassures the insurer about the ongoing viability of the policy. This requirement reflects a standard underwriting practice in the life insurance industry, emphasizing the insurer's need to evaluate risk and ensure that they are not insuring a significantly increased risk compared to when the policy was originally issued.