What is the provision that allows a policyowner to restart a lapsed policy?

The correct answer is the reinstatement provision, which is specifically designed to allow a policyowner to restore a lapsed insurance policy. When a policy lapses due to nonpayment of premiums, the reinstatement provision provides the option to reinstate the coverage under certain conditions, such as paying any outstanding premiums and possibly demonstrating insurability.

This provision is essential for policyholders who may have temporarily forgotten to make a payment or faced financial difficulties, allowing them to regain their insurance coverage without having to purchase a new policy. It is typically subject to specific time frames and requirements outlined in the policy.

In contrast, the grace period is a timeframe during which a policyholder can make a premium payment without the policy lapsing, but it does not apply once the policy has lapsed. Nonforfeiture options relate to benefits available to policyholders who stop paying premiums, such as cash value or reduced paid-up insurance, but do not allow for reinstatement of a lapsed policy. The automatic premium loan provision is a feature that allows an insurer to use the cash value of a policy to pay overdue premiums, preventing lapsation but not directly addressing the reinstatement of policies that have already lapsed.