PSI Life Exam Practice Test

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Study for the PSI Life Exam. Enhance your knowledge with flashcards and multiple choice questions, each question comes with detailed explanations. Prepare effectively for your certification exam!

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In a life insurance policy, what does a reinstatement provision typically address?

Change of beneficiary
Missed premium payments
Policy renewal
Conversion options

The correct answer is: Missed premium payments

A reinstatement provision in a life insurance policy specifically addresses the circumstances under which a lapsed policy can be reinstated after missed premium payments. When a policyholder fails to pay their premiums, the policy may lapse, leading to a loss of coverage. The reinstatement provision allows the insured to reinstate the policy, typically by fulfilling certain requirements, such as providing evidence of insurability and paying the overdue premiums within a specified time frame. This provision is crucial because it provides policyholders with an opportunity to regain their life insurance coverage without having to go through the process of applying for a new policy, which could involve higher premiums or denial due to health changes. The other options relate to different aspects of life insurance policy management: changing the beneficiary pertains to updating who receives the death benefit, policy renewal refers to extending the policy term upon its expiration, and conversion options involve changing the type of policy from term to permanent. However, these do not directly relate to the reinstatement of a lapsed policy due to missed premium payments.