An insured lapsed a Life insurance policy one year ago and now wants to reestablish...

C. Reinstatement provision is correct. Reinstatement is specifically designed to restore a life insurance policy that has terminated because of premium default, provided the policyowner satisfies the contractual and statutory requirements.

Hawaiʻi's life insurance law requires individual life policies to contain a reinstatement provision. Under HRS §431:10D-102, a policy can be reinstated within three years from the date of premium default , unless it has been surrendered for its cash value or applicable paid-up term insurance has expired. Reinstatement requires a written application, satisfactory evidence of insurability, payment of premiums in arrears, and settlement or reinstatement of applicable policy indebtedness with interest. The scenario states that the lapse occurred only one year ago , placing it within that reinstatement period. Hawaiʻi's enacted statutory text establishes this three-year framework.

A grace period operates immediately after a premium becomes overdue and is far shorter than one year. Renewability concerns continuation or renewal of coverage according to policy terms, particularly term insurance. The consideration clause identifies the contractual consideration—primarily the application and premium—and does not restore lapsed coverage.

The 2026 Hawaiʻi examination outline also explicitly lists Reinstatement as a tested life-policy provision.

Reference topics: HRS §431:10D-102; Reinstatement; Grace Period; Policy Provisions.

===============