What typically happens during the reinstatement of a lapsed life insurance policy?

When a life insurance policy lapses due to non-payment of premiums, reinstating it involves certain requirements to ensure that the policyholder is still eligible for coverage. The correct process typically requires the policyholder to prove insurability, which means they need to provide evidence of their health status to the insurance company. This is important because the insurer needs to evaluate the risk associated with reinstating the policy, as the health status of the insured may have changed since the policy lapsed.

Additionally, the policyholder must pay any premiums that are due at the time of reinstatement. This ensures that the insurer receives payment for the coverage being granted and that the policy is brought back into force under the original terms before it lapsed.

This process is designed to protect both the insurer and the insured, ensuring that coverage is only provided under the proper circumstances, maintaining the financial integrity of the insurance system. The other options do not align with typical industry practices: covering costs without conditions or having automatic renewals without further action neglects the necessary underwriting process, while automatic conversion to different coverage types isn't standard in reinstatement scenarios.