Intact, unmodified knob-and-tube can function, but it has no ground, cannot sit under insulation safely, and most runs have been spliced over the decades. Insurers increasingly decline it, and replacement is the durable fix.
Knob-and-tube was designed to dissipate heat in open air. Blown-in attic insulation buries it, which is the failure mode inspectors flag most.
The practical path is a circuit-by-circuit survey: document what is original, what has been spliced, and what is buried, then price a phased replacement starting with the highest-risk runs.