State RegulationsNC specificDifficulty 3/5
A Raleigh resident allowed an individual life policy to lapse for nonpayment three years ago. The policy was never surrendered and the cash value has not been exhausted. Under North Carolina law, which statement is correct?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under G.S. 58-58-22(5), the uniform reinstatement provision, the insured may apply to reinstate a lapsed policy within five years after the date of premium default, unless the policy was surrendered or the cash value was 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. Because the lapse is only three years old, the five-year window is still open.
Why the other options are wrong
- B) The statutory window is five years after the default, not one year; a lapse of three years leaves the reinstatement right intact.
- C) The statute requires repayment of all overdue premiums AND any policy debt with interest, so a no-interest, no-debt formulation misstates the reinstatement conditions.
- D) Reinstatement is not automatic or unconditional; the insured must submit evidence of insurability and pay the overdue amounts within the five-year window.
Memory hook
Five years to revive a lapsed NC life policy - with proof of insurability and back pay.