Tennessee Insurance Practice Exam

What is an advantage of reinstating an original life policy?

1. Premiums are based on the current age

2. Immediate cash value access

3. Premiums are based on a younger age

4. Increased death benefit coverage

The correct answer is: Premiums are based on a younger age

Reinstating an original life policy offers the advantage of premiums being calculated based on the insured's age at the time the policy was originally issued, which is generally a younger age than the current age of the insured. This could result in lower premium costs compared to starting a new policy, where premiums are assessed based on the insured's current age, which is typically higher. Maintaining a policy rather than applying for a new one also allows the insured to preserve the underwriting and benefits of the original policy. Newer policies may require new underwriting processes that could lead to higher premiums reflecting the insured's current health and age. Thus, reinstating the original life policy can be financially beneficial, keeping costs lower as the insured ages.