Washington Life Producer Practice Exam

What is the term for the automatic continuance of insurance coverage?

1. Renewal

2. Restoration

3. Reinstatement

4. Extension

The correct answer is: Renewal

The term "renewal" refers to the automatic continuance of insurance coverage, typically at the end of a policy term. In insurance, when a policy is renewed, it means that the coverage will continue for another term without requiring the policyholder to take additional action, although this may depend on payment of premiums and sometimes a reassessment of insurability by the insurer. This routine process is important for maintaining continuous coverage without interruption, ensuring that the insured remains protected under the terms of their policy. Renewal often involves updates in the policy's terms or conditions, as insurers evaluate risk and adjust for any changes that may have occurred since the original policy was issued. Other terms like restoration, reinstatement, and extension carry distinct meanings. Restoration typically refers to bringing a policy back to its original state after it has lapsed, reinstatement involves reactivating a policy that has lapsed due to non-payment (requiring certain conditions to be met), and extension refers to a temporary increase in coverage duration or limits under specific circumstances, rather than the general continuation of an existing policy.