State RegulationsNC specificDifficulty 3/5
A policyholder in Durham stopped paying premiums on an individual life policy three years ago; the policy was not surrendered and its cash value is not exhausted. Under G.S. 58-58-22(5), for how long after the premium default may he apply to reinstate the policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under G.S. 58-58-22(5), a lapsed individual life policy may be reinstated on application within 5 years after the date of premium default, unless the policy was surrendered or the cash value exhausted. Reinstatement requires a written application, evidence of insurability satisfactory to the insurer, payment of all overdue premiums, and repayment of any policy debt with interest.
Why the other options are wrong
- A) Three years is a commercial-textbook figure; the North Carolina statute gives 5 years.
- B) Two years is the incontestability and suicide window under G.S. 58-58-22(2) and G.S. 58-58-22(4), not the reinstatement window.
- D) One year is not the reinstatement window under G.S. 58-58-22(5).
Memory hook
Five years to bring a lapsed life policy back to life.