Final answer:
The principled or postconventional stage is when individuals develop an internal set of standards and values in the process of moral development.
Step-by-step explanation:
The stage of personal moral development in which an individual develops an internal set of standards and values is known as the principled stage, or the postconventional level in Lawrence Kohlberg's theory of moral development. In this stage, individuals begin to base their moral decisions on universal ethical principles rather than societal expectations or personal gain. They develop a sense of justice, fairness, and respect for others.This stage is defined by the development of an internal moral principle that may or may not align with societal norms and laws. People in this stage think of morality in abstract terms and recognize that legality and morality do not always coincide.