Life insurance reinstatement and revival are both terms that refer to an insurer putting a policy back in force. The policy may be reinstated if the customer pays the premium owed within a set time, along with any applicable interest charges. The life insurance policy is a contract between the insurance company and the customer. The company agrees to pay out a benefit under the policy so long as the customer pays the premiums. When the customer doesn’t pay the premiums as agreed, the insurer may cancel the policy.
In a case where it has been several months since the policy has lapsed, it can be revived. The customer may be asked to provide proof of insurability by answering a medical questionnaire. Coverage rates may be adjusted in this instance. The insurance company may offer a payment arrangement for customers who are unable to pay a lump sum to get their premium payments brought up to date.
Continue reading below for more information on the difference between life insurance revival and reinstatement. Also, be sure to enter your zip code in above for free insurance quotes!
Life Insurance Policy Lapse
A customer who has not paid his or her life insurance premium on time should contact the insurer as soon as possible to discuss the situation. If the non-payment was due to an oversight, the customer may be able to make arrangements to pay by check, online banking or through an ATM to bring the policy up to date. Some insurance companies will give a customer a 30-day grace period when a premium payment is not made on time. This option may only be available to customers who pay their premiums annual or semi-annually. Those who have arranged to pay monthly should ask whether they have any kind of grace period before the insurance company cancels their coverage.
Reviving a Life Insurance Policy
When the policy premiums have not been paid for several months, the customer may still be able to have his or her policy revived. This option may only be available to those who have established a record of paying premiums on time for a few years. The specific insurance company involved will be able to advise a customer who is interested in having his or her policy revived about available options for specific situations.
The insurance company may charge interest in a situation where the insurance policy premiums have been in default for several months. Certain companies will reinstate an insurance policy that has been in default for up to five years, but each insurer is free to set its own rules about whether or when it will revive a policy. The insurer will advise whether the amount due includes interest and at what rate. The customer should also ask whether the insurance company is willing to work out a reasonable payment arrangement to bring the amount owed up to date.
If the time the policy has lapsed is long enough (over six months), the customer may be required to provide up to date medical information before it can be revived. The company wants to evaluate the level of risk that the customer currently presents before agreeing to provide coverage.
Before Your Policy Lapses
If you have a life insurance policy in place and you are finding the premiums are putting a strain on your budget, you have options available. Contact the insurance company to explain the situation and ask how to you reduce the cost of coverage.
For example, if you have a universal life policy, ask whether you can convert it to a term life one. The premium rates charged should be lower, since you are only buying insurance for a set time instead of for life. Choosing a shorter term will also help to save you some money on the cost of your coverage.
In a case where you like the idea of universal life insurance coverage, ask whether you can lower the amount of coverage you have in place. A lower death benefit means lower premiums, but you will need to consider whether saving money on premiums is more important than the level of protection you have in place.
The insurance company can work with you to find the right solution for your situation. The best time to do so is before your policy lapses. That is the time when you will have the most options and the insurer is most likely to be willing to help you. Keep in mind that the insurer does not have to grant any grace period if the premiums are not paid on time.
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