LLQP Ethics & Professional Practice · Component 1.3 · 60% of the exam
The statutory right of 'reinstatement' of a lapsed life policy generally allows the owner to:
- Reinstate within a set period by paying arrears with interest and providing evidence of insurability
- BNever reinstate, since a lapsed policy is terminated and a new application is the only route to coverage with that insurer
- CReinstate at any time without conditions, since the owner has a statutory right to the original contract
- DReinstate without paying back premiums, since the insurer carried no risk while the policy was lapsed
Correct answer: A) Reinstate within a set period by paying arrears with interest and providing evidence of insurability
Reinstatement restores the original contract (usually better than a new policy) but restarts the two-year periods for the reinstated coverage.
Why the other options are wrong
- BReinstatement is a statutory right within the period.
- CConditions and time limits apply.
- DBack premiums are required.
Exam tip
Reinstate: within ~2 years, back premiums + interest, evidence; 2-year periods restart.
Common mistake
Advising a new policy when reinstatement would preserve better terms.
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.