PSI Ohio Insurance Practice Exam

What is the primary advantage for obtaining a reinstatement of a policy rather than obtaining a new one?

1. Lower premiums for new policies

2. Insured original issue age is used

3. Immediate coverage without waiting period

4. Increased policy benefits

The correct answer is: Insured original issue age is used

The primary advantage of obtaining a reinstatement of a policy instead of acquiring a new one lies in the fact that the insured retains their original issue age. When a policy is reinstated, it typically uses the age at which the policy was originally issued, which can lead to lower premiums than if a new policy were bought at a later age. This is significant because as individuals age, the risk to the insurer increases, resulting in higher premium costs for new policies. This advantage allows insured individuals to maintain their coverage at a more favorable cost while avoiding potential waiting periods associated with new policies. Furthermore, reinstatement can prevent the loss of benefits and accumulated values that come with the original policy, making it especially advantageous for individuals who have had a long-standing policy.