New Jersey Life and Health State Practice Exam

What are the two major actions required for a policyholder to comply with the Reinstatement Clause?

1. Pay overdue premiums, provide a new beneficiary

2. Provide evidence of insurability, pay past due premiums

3. Submit a claim, pay a fee

4. Provide a valid ID, pay administrative costs

The correct answer is: Provide evidence of insurability, pay past due premiums

The Reinstatement Clause in an insurance policy allows a policyholder to reinstate a lapsed policy after it has been canceled due to non-payment of premiums. To successfully reinstate the policy, the policyholder must meet two essential requirements: 1. **Provide evidence of insurability**: This means that the policyholder must demonstrate that they are still eligible for the coverage, which often involves supplying information about their current health status. This requirement is in place because the insurer wants to ensure that the risk has not significantly changed since the policy was originally issued. 2. **Pay past due premiums**: This is a fundamental requirement as the policy lapsed due to missed payments. By paying the overdue premiums, the policyholder fulfills their financial obligation to the insurer, which is a necessary step in reinstating coverage. These two actions work together to ensure that a policyholder can regain their insurance coverage, allowing the insurer to assess the risk before reinstating the policy and ensuring that all premiums owed are settled.