New York Insurance Exam Practice Question
What is the purpose of a policy's reinstatement provision?
Correct Answer: B
Rationale: The reinstatement provision of a policy is designed to restore a lapsed policy, allowing the policyholder to regain coverage after failing to pay premiums on time. This option enables individuals to maintain their insurance protection without having to start a new policy.
Option A, canceling the policy, contradicts the purpose of reinstatement, which is to continue coverage. Option C, increasing premiums, is unrelated to reinstatement; premiums may change, but this is not the provision's intent. Lastly, option D, waiving the death benefit, misinterprets the provision's goal, as reinstatement aims to preserve benefits rather than eliminate them.
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