New Jersey Life and Health State Practice Exam

Which of the following is a reinstatement condition?

1. Payment of back premiums

2. Proof of insurability

3. Submission of a new application

4. Verification of previous claims

The correct answer is: Proof of insurability

The reinstatement of a lapsed insurance policy typically involves certain conditions that need to be fulfilled by the policyholder. One of the primary conditions generally required is proof of insurability. This means that the policyholder must provide evidence that they are still insurable under the same terms as when the policy was originally issued, which might involve undergoing a medical exam or providing updated health information. Reinstatement serves to re-establish the coverage that was lost due to non-payment of premiums. Insurers need assurance that the risk they are undertaking is still acceptable. Therefore, proof of insurability is a standard requirement because it ensures that the individual continues to meet the underwriting criteria that the insurer utilized when issuing the original policy. Other options, while relevant to insurance in some contexts, may not universally apply as reinstatement conditions. For instance, payment of back premiums is often a stipulation as well, but it typically doesn’t replace the necessity for proof of insurability, which is more crucial in determining the risk associated with the insured's current state of health. Similarly, submission of a new application is not always required in reinstatement processes, as the original application may still be valid if it’s within the insurer’s guidelines. Lastly, verification of previous