BANKING AFFAIRS

Detailed explanation-1: -Definition: If an insured person fails to pay the premium due to various circumstances and as a result the insurance policy gets terminated, then the insurance coverage can be renewed. This process of putting the insurance policy back after a lapse is known as reinstatement.

Detailed explanation-2: -What Is Reinstatement? Reinstatement is the restoration of a person or thing to a former position. Regarding insurance, reinstatement allows a previously terminated policy to resume effective coverage.

Detailed explanation-3: -Reinstatement Provision This provision allows a policy to be reinstated if for some reason the policy has lapsed. The reinstatement is subject to the limitations and requirements spelled out in the policy.

Detailed explanation-4: -Beyond this, if the premium is unpaid, the policy is considered to have lapsed. However, lapsed policies can be revived. A policy can be revived by paying the past premiums, and additional charges as levied by the insurer.

Detailed explanation-5: -Most policies can be reinstated within five years of lapsing as long as overdue premiums are paid and loans against the cash value are satisfied. Most companies require proof of insurability, however, reinstating a lapsed policy can be less expensive that purchasing an entirely new policy.