A lapsed Hawaii individual life insurance policy is being reinstated. Interest charged on overdue premiums and qualifying policy indebtedness under the statutory reinstatement provision may NOT exceed:
B is correct. Hawaiʻi's individual life insurance reinstatement provision allows qualifying lapsed coverage to be restored within the statutory reinstatement period when the required conditions are satisfied. HRS §431:10D-102 provides that reinstatement generally requires a written application , satisfactory evidence of insurability, payment of premiums in arrears, and payment or reinstatement of other indebtedness on the policy. Interest on those amounts may be charged at a rate not exceeding 6% per year compounded annually under the standard provision.
Reinstatement is generally available within three years after premium default , unless the policy has already been surrendered for its cash surrender value or applicable paid-up term insurance has expired.
The provision should not be confused with Hawaiʻi's rules governing policy loans issued after June 22, 1982 , which may permit a fixed maximum policy-loan rate of 8% or an adjustable rate satisfying statutory requirements. A policy-loan interest rate and the statutory reinstatement interest ceiling are separate concepts.
Options C and D therefore improperly import higher rates into the reinstatement provision. Option A is below the maximum but does not state the statutory ceiling.
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