Question 84

A reinstatement clause outlines reinstatement conditions that include proof of insurability.

A reinstatement clause typically requires proof of insurability as a condition for reinstating a lapsed insurance policy. This is essential for the insurer to assess the current health status of the insured before allowing reinstatement.

A) proof of insurability.

This option is correct because a reinstatement clause often mandates that the policyholder provide evidence of their insurability, which means demonstrating that they still meet the health requirements for coverage. This is a standard practice to mitigate the risk for insurers when a policyholder seeks to reinstate a lapsed policy.

B) a higher premium charge.

This option is incorrect because while premiums may change upon renewal or reinstatement, a reinstatement clause does not universally include a requirement for a higher premium. The reinstatement conditions primarily focus on the insured's health status rather than an automatic increase in premium rates.

C) a decrease in policy limits.

This option is incorrect as reinstatement clauses do not typically include terms that automatically decrease policy limits. Instead, they focus on the conditions under which the original limits may be reinstated, contingent upon proof of insurability.

D) premiums based on current age.

This option is incorrect because while premiums may be adjusted based on age during new policy applications, reinstatement clauses do not solely hinge on current age for reinstatement. They are more concerned with the insured's health and insurability.

Conclusion

The correct answer is definitive as it addresses the primary requirement of a reinstatement clause, which is proof of insurability. The other options fail to capture the essence of what a reinstatement clause entails, focusing instead on aspects that are not universally applicable to reinstatement conditions. Thus, only option A aligns with the core concept being tested.