State RegulationsNY specificDifficulty 2/5
Which statement correctly describes what a New York life insurer may require before reinstating a lapsed life policy?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §3203(a)(10), a life insurer may require evidence of insurability as it may reasonably require, plus payment of all overdue premiums and interest not exceeding 6% per annum compounded annually, before reinstating a lapsed policy within 3 years of default. Reinstatement restores the same contract rather than issuing a new one. This differs from health policies, which reinstate automatically under §3216(d)(1)(D).
Why the other options are wrong
- B) Payment of cash value is not a reinstatement requirement; §3203(a)(10) requires overdue premiums and interest, not the cash value.
- C) Automatic reinstatement is the rule for health policies under §3216(d)(1)(D); life policies require evidence of insurability as the insurer may reasonably require.
- D) Reinstatement restores the same contract under §3203(a)(10); the incontestability clock in §3203(a)(3) runs from the original date of issue, not from reinstatement.
Memory hook
Life reinstatement is earned: prove insurability, pay arrears plus interest.