What provision allows a policyholder to reactivate a lapsed life insurance policy?

The reinstatement provision is a crucial aspect of life insurance policies, allowing policyholders to restore a lapsed policy under specific conditions. When a policy lapses due to non-payment of premiums, the reinstatement provision enables the policyholder to reactivate their coverage without needing to purchase a new policy.

Typically, this provision includes requirements such as submitting a reinstatement application and paying any outstanding premiums, possibly along with interest. The policy may also require proof of insurability, depending on how long the policy has been lapsed. This feature is beneficial for policyholders who wish to maintain continuity of coverage after a lapse, rather than going through the entire underwriting process again for a new policy.

The other options offered do not provide the same function. The conversion provision refers to the ability to convert term insurance to permanent insurance. The adjustment clause is commonly associated with changing the terms of the policy under specific circumstances rather than reactivating a lapsed policy. The renewal option applies to certain policies that allow renewal at the end of a term, but it does not address lapsed policies specifically. Thus, the reinstatement provision is the correct answer because it directly pertains to reactivating a lapsed life insurance policy.