“Reinstating a policy” refers to the process of restoring a previously lapsed or cancelled insurance policy back to active status. This action allows the policyholder to regain coverage under the terms of the original insurance contract, typically after addressing the reasons for the policy’s lapse or cancellation, such as non-payment of premiums. Reinstatement is subject to the insurance company’s approval and often involves specific conditions or requirements set by the insurer.
Key aspects of reinstating a policy include:
Application for reinstatement
The policyholder must formally request reinstatement from the insurance company. This process may involve completing a reinstatement application and providing a statement of health or other documentation to prove insurability.
Payment of back premiums
Typically, reinstating a policy requires the policyholder to pay all overdue premiums, possibly along with interest or penalties. This payment is necessary to cover the period during which the policy was lapsed.
Evidence of insurability
Depending on the length of time the policy has been lapsed and the insurer’s policies, the policyholder may need to provide evidence of insurability. This could include undergoing a medical examination or providing medical records to demonstrate that their health status has not significantly changed since the policy lapsed.
Waiting period
Some insurers may impose a waiting period after reinstatement before full coverage becomes effective again, particularly for certain benefits or conditions.
Reinstatement limitations
There are often time limits within which a policy can be reinstated, typically ranging from a few months to several years after the policy lapses. The specific terms and conditions for reinstatement are outlined in the original policy contract. For life insurance, the provincial Insurance Acts generally give a right to reinstate a lapsed policy within two years of the lapse, if the overdue premiums are paid with interest and evidence of insurability is provided. Quebec’s Civil Code has a similar two-year rule.
Policy terms
Upon reinstatement, the policy generally continues under the terms and conditions of the original contract, although some insurers may require a new contract or modify certain terms at reinstatement.
Reinstating a policy can be a valuable option for policyholders who have lost coverage but wish to continue their insurance protection without undergoing a new application process or potentially facing higher premiums due to changes in age or health status.