What is the primary advantage to the policyowner in the reinstatement of a life insurance policy?
Asked by: Shana Murazik PhD | Last update: October 15, 2025Score: 4.7/5 (68 votes)
What is the primary advantage of the policy owner in the reinstatement of a life insurance policy?
The life insurance reinstatement provision allows you to reactivate a lapsed policy. Reinstatement typically requires paying back premiums, accrued interest, and proof of insurability. Benefits of reinstatement include keeping your original rates and avoiding a new policy application.
Which of the following best describes what a policyowner must do to reinstate a lapsed life insurance policy?
Reinstatement - Restoring a lapsed policy to its original premium paying status, upon payment by the policy owner, with interest, of all unpaid premiums and policy loans, and presentation of satisfactory evidence of insurability by the insured.
What is the advantage of reinstating an original life policy quizlet?
When the primary beneficiary dies before the insured. What is the advantage of reinstating a life insurance policy as opposed to applying for a new one? Policy premium in a reinstated policy will be set according to the insured's original age.
What must the insured do in order to reinstate a life insurance policy?
Generally, the insured must make written application for reinstatement, meet the company's underwriting guidelines, and pay all overdue premiums (plus interest) and reinstatement fees.
Policy Owner vs. Policy Insured vs. Policy Beneficiary: What's The Difference?
What are the two major actions required for a policyholder to comply with the reinstatement clause?
What are two major actions required for a policyholder to comply with the Reinstatement Clause? Provide evidence of insurability and pay past due premiums.
What happens when you reinstate your insurance?
See if your policy can be reinstated
That means you'll maintain continuous insurance with the policy you had previously. When reinstating, you'll pay the past due balance, and you'll be covered without any lapse.
What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one?
The main advantage of reinstating a policy rather than obtaining a new one is that it allows the insured to maintain their original issue age, which prevents their premium from increasing based on their age at the time of reinstatement.
Which of the following is true concerning reinstatement of a life insurance policy?
Final answer: The true statement about the reinstatement of a life insurance policy is that companies have the right to require medical examinations. Back premiums typically must be paid, and proof of insurability is usually required.
What are the requirements for reinstating a lapsed life insurance policy quizlet?
In order to reinstate, the insured must provide evidence of insurability and the owner must pay all back premiums from the date of lapse plus interest. Reinstatements are designed to put a policy back in force as if the lapse never occurred. Upon reinstatement, a new incontestability period takes effect.
Who has the right to change a revocable beneficiary?
A revocable beneficiary is a more flexible option. It allows the policy owner to change the beneficiary on their policy without restriction. To make a change, the policy owner simply submits the request to the insurance company, and there's no need to notify or ask the current beneficiaries before proceeding.
How long can the reinstatement period be in a life insurance policy?
Typically, insurers allow parties to reinstate a lapsed policy within three to five years after the lapse.
What is the 2 3 survivor settlement option?
Joint and 2/3 to survivor (no refund) – This option pays an income while both annuitants are alive. When one dies, 2/3 income payments continue during the survivor's lifetime. Payments stop when the second annuitant dies.
What is the primary advantage of term insurance?
Term life insurance offers cost-effective coverage for a defined duration. It offers high death benefits at lower premiums compared to permanent policies. Ideal for temporary needs like mortgage protection or income replacement. Policies are customizable with various term lengths and coverage amounts.
What is the primary incentive for a life insurance owner to sell his or her policy to a third party buyer under a settlement arrangement?
Life settlements involve a policy owner selling a life insurance policy to an unrelated third party for more than its cash surrender value and less than its death benefit. The new owner then pays any remaining premiums and the new beneficiary eventually receives the death benefit.
Which of the following is generally a prerequisite to reinstating a life insurance policy that has not been surrendered for its cash surrender value?
The company requires evidence of insurability and payment of all amounts necessary, including interest, to put the policy into the condition it would have been in had the lapse or surrender not occurred.
Which of the following statements about the reinstatement provision is true?
The correct statement about the reinstatement provision is that it requires the policyowner to pay all overdue premiums with interest before the policy is reinstated. Reinstatement provisions typically allow policyholders to reinstate a lapsed insurance policy within a certain period, usually 2-3 years, not 10 years.
What are the two types of assignments?
There are two types of assignment: absolute and collateral. Absolute assignment is the equivalent to a sale of the policy; it is an irrevocable transfer of all ownership rights. Collateral assignment is used quite often in securing loans from lending institutions.
What is the benefit of having a primary and secondary insurance?
Whenever you make a health insurance claim, your primary insurance plan will act as if you had no secondary plan and provide you with your benefits. Then your secondary insurance plan kicks in and covers the rest of the cost if it's covered and necessary.
Which of the following is one of the key advantages of using life insurance in a qualified plan?
Buying life insurance in a qualified plan can potentially unlock dollars to pay policy premiums. For the right individual, this may be an efficient way to buy life insurance. By paying tax on the REB, the participant can help ensure a portion of the policy's death benefit is paid income-tax-free1.
Which statement is not correct about the reinstatement of a health insurance policy?
Final answer: The incorrect statement about the reinstatement of a health insurance policy is the assumed 45-day approval period for the reinstatement application.
What is the advantage of reinstating a policy?
Reinstating your life insurance policy allows you to keep the original terms, rates, and benefits, which can help you avoid higher premiums due to any deterioration in your health since the policy was first purchased.
What is a reinstatement of life insurance policy?
Regarding insurance, reinstatement allows a previously terminated policy to resume effective coverage. In the case of nonpayment, the insurer may require evidence of eligibility, such as an updated medical examination for life insurance, and full payment of outstanding premiums.
What are the two types of reinstatement?
There are two main types of Reinstatement, “Direct” and “Round the Clock”.