Final answer:
The statement is false, as the principle of overload relates to the need for progressively increasing the intensity or duration of exercise to improve fitness, not the loss of benefits due to inactivity.
Step-by-step explanation:
The principle of overload actually refers to the concept that in order to improve physical fitness, one must increase the demand on the body beyond what it is normally used to. This means that the statement "The principle of overload states that the physical benefits of exercise are lost through disuse or inactivity." is false. Instead, the principle of overload is about the need for progressively increasing the intensity or duration of exercise to stimulate adaptation and increased fitness.