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When a line is finished
Rope rarely parts without warning. The warning is there, you just do not see it unless you know what to feel for. And it parts exactly when the load is highest.

What ages rope
Sun breaks down the fibres, salt crystals work inside like grit, and every edge a line runs over takes more away at that one point than the whole rest of the year.
The hand check
A healthy line is supple and rolls between your fingers. Once it goes hard, stiff or glassy, the material is spent. What counts is not how it feels after the passage but how it feels once dry.
The eye check
Cover fuzzed or split, core showing, bleached patches, local thickening or thinning. A thin spot means the core has already broken inside.
Retire it, do not shorten it
A sheet can be turned end for end once so the chafe point sits somewhere else. After that it goes. A halyard that has run over the same point in the mast for years does not improve by being reversed.
What this has to do with insurance
Wear and tear is normally not covered under hull insurance, and a consequential loss from a parted line is judged on exactly that. What applies to your contract is set out in your own policy wording. The practical advice stays the same: halyards and sheets have an age, not only a condition.