LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
A client whose policy lapsed eighteen months ago asks to have it reinstated. The insurer will typically require:
- Anothing beyond a written request, since reinstatement is a statutory right of the owner
- Ba completely new application, because a lapsed policy can never be restored
- evidence of insurability along with payment of the overdue premiums and any interest
- Donly the payment of one month's premium to bring the contract back into force
Correct answer: C) evidence of insurability along with payment of the overdue premiums and any interest
Reinstatement is available within the period the statute and contract allow, usually two years. The owner must prove continued insurability and pay the arrears, and the contestability and suicide periods generally restart.
Why the other options are wrong
- AThe right is conditional on insurability and payment of arrears.
- BA lapsed policy may be reinstated within the prescribed period.
- DAll overdue premiums, not just one, must be paid.
Exam tip
Reinstatement equals insurability plus arrears, and the clocks restart.
Common mistake
Presenting reinstatement as automatic on payment of a single premium.
What this tests
CISRO competency component 1.3 — Integrate into practice the legal aspects of insurance and annuity contracts — which is weighted at 60% of the Ethics & Professional Practice module. Written against the published curriculum.
More from component 1
- An 'assignee' of a life insurance policy is:
- A corporation as policyowner and beneficiary of a policy on a key employee:
- A 'trustee' named to receive proceeds on behalf of a beneficiary:
- The 'automatic premium loan' (APL) provision:
- A life insurance contract 'matures' when:
- The 'assignment' provision typically states that:
Practice the whole Ethics & Professional Practice module
Timed sets weighted like the exam, and review of every question you miss. Free to start.