AD Banker Comprehensive Practice Exam

How long does the insurer have to approve or deny reinstatement of a lapsed policy after a conditional receipt is issued?

1. 90 days from the date of the conditional receipt

2. 120 days from the date of the conditional receipt

3. 45 days from the date of the conditional receipt

4. 20 days from the date of the conditional receipt

The correct answer is: 45 days from the date of the conditional receipt

The insurer is typically required to approve or deny the reinstatement of a lapsed policy within 45 days from the date of the conditional receipt. This specific timeframe is established to ensure that policyholders receive a timely response regarding their reinstatement requests, providing a level of certainty and clarity about the status of their insurance coverage. The conditional receipt indicates that the insurer has received the application for reinstatement, and the 45-day period allows the insurer sufficient time to assess the application, review any necessary documentation, and make a decision. The other options suggest longer periods than what is typically required, which may lead to unnecessary delays in the reinstatement process for policyholders. The 45-day timeframe strikes a balance between allowing the insurer to perform their due diligence while also respecting the policyholder’s need for a prompt resolution.