Washington Life Producer Practice Exam

What does it mean to have a policy reinstated?

1. Extending the coverage period

2. Restarting a lapsed policy

3. Changing the policy's terms

4. Transferring the policy to another insurer

The correct answer is: Restarting a lapsed policy

Having a policy reinstated refers to the process of restarting a lapsed insurance policy. This can happen when a policyholder has stopped making premium payments and the policy has become inactive due to non-payment or other reasons. Reinstatement allows the policyholder to renew their coverage, typically by paying any overdue premiums along with possible interest or fees. When a policy is reinstated, it often involves the insurer reassessing the policyholder's insurability, which means the individual may need to meet certain conditions or provide updated health information. In contrast, extending the coverage period merely alters the duration of the existing coverage but does not address the lapse aspect. Changing the policy's terms would involve modifications to the conditions or benefits of the policy rather than simply reinstating it. Lastly, transferring a policy to another insurer is a separate action that does not involve the reinstatement of the original policy.