Colorado Life Producer License Practice Test

What evidence is usually required for reinstating a lapsed policy?

1. Proof of ownership

2. Medical evidence of insurability

3. Financial statements

4. Assessment of previous claims

The correct answer is: Medical evidence of insurability

When reinstating a lapsed policy, the most common requirement is medical evidence of insurability. This is important because when a policy lapses, the insurer needs to reassess the risk associated with the insured individual. The circumstances under which the policy lapsed may have changed, and the insurer wants to ensure that the individual is still eligible for coverage based on their current health status. Medical evidence may include health questionnaires, medical exams, or records that demonstrate the individual's current health condition. This process helps the insurer determine if they can accept the risk now, given any changes in the policyholder's health since the policy lapsed. By requiring this evidence, the insurer protects itself from unforeseen risks that may have developed during the lapse period. Other options, while potentially relevant in different contexts, do not directly address the core concern of insurability that the insurer faces when a policyholder seeks reinstatement.