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Reinstatement Period in Term Insurance

Missed a premium payment? Reinstatement periods can help you regain coverage. Learn how term insurance can protect you.


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A Term Plan is the most reasonable form of financial protection for a definite period of time when it comes to life insurance. It guarantees a payout to the nominee in the event of the demise of the policyholder during the policy term. Affordability is one of the most distinctive features of such a plan along with several features including the Reinstatement Period. This article gives an overview of the Reinstatement Period in Term Insurance.

What does reinstatement mean?
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Reinstatement of a policy means restoration of an insurance plan that had been previously cancelled or terminated. The reinstatement of a lapsed Term Plan may come with additional charges and interest along with the outstanding premium amounts. This can vary according to the terms and conditions of the insurer.

When does a Term Plan lapse?
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A Term Plan usually lapses due to lack of premium payment. In an agreement between the insurer and the policyholder, the insurance company provides coverage and payout amount to the nominees in the event of the untimely demise of the policyholder. For this, the policyholder needs to pay an amount towards a monthly or yearly premium as chosen at the time of the purchase of the policy.

If the policyholder is unable to pay the premium towards the plan under any circumstances, the insurer provides a term insurance grace period to clear the payments. If the policyholder is unable to make the payment even in the grace period, it may cause the policy to lapse. A lapsed policy does not provide coverage.

Death benefits during the grace period
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Death benefits are paid to the nominee in case the policyholder passes away during the grace period. Some deductions may apply as stated by the insurer at the time of the inception of the policy.

How does reinstatement work?
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Reinstatement of a lapsed Term Plan can take place within the revival period as stated in the policy document. This is after the grace period given by the insurer. The Term Plan remains active during the grace period but after the grace period is over the policy becomes inactive. This means that no claim will be paid to the beneficiary in case the policyholder passes away.

During this period called the revival period, the policyholder can contact the insurer and fill out the revival form. After this, the outstanding amount towards the premiums plus the additional fee and applicable charges will have to be paid to reinstate the policy. 

The policy document contains all the information for the process that needs to be followed. The insurance company can also be directly contacted for more information.

Ways to reinstate a lapsed policy
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The two ways to reinstate a lapsed policy are as follows.

Within the grace period
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This is the extra period provided by the insurance company in case of non-payment of premium. During this period, the policyholder can pay the outstanding amount without any extra charges and enjoy the benefits of a Term Plan.

Beyond the grace period
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Beyond the grace period, the policy becomes inactive. During this time the piled-up premiums are to be paid with additional interest and any late fees according to the conditions of the insurer.

Advantages of reinstatement of a Term Policy
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Policyholders usually have two options to choose from. One can be reviving a lapsed policy and the other can be buying a new plan. Comparatively, the first option has advantages. Here are some advantages of reviving a lapsed policy. 

In case of reinstatement, the incontestability period will be counted from the original date of purchase and not the date of revival. On the other hand, in the case of the purchase of a new plan, the incontestability period starts from the conception of the policy.

An example to understand the overall importance of reinstatement of policy is as follows. Suppose Shiven bought a Term Plan in 2015 with a sum assured of Rs. 50 lakhs for a policy term of 15 years. He was asked to undergo a medical test at the time of policy purchase. His premium based on all factors was calculated to be Rs 7,000 per year. He paid the premiums regularly until 2019. 

He has been unable to pay premiums from 2019 to 2023. The policy has lapsed and offers no payout at the moment. He wants to revive the policy and is asked to pay the outstanding amount of four premiums which is Rs. 28,000 and an additional fee of Rs. 15,000. He might have to undergo the medical examination again to prove his good health after the lapsed period. 

Here, the key point to note is that the cost to buy a new policy will still be higher than the cost to reinstate a lapsed policy.

Steps to avoid a lapse in policy
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Some steps to avoid a policy lapse are as follows. 

Points to remember
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Some points to remember regarding Reinstatement Period in Term Insurance are as follows.

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Here’s a list of common questions and answers related to the Reinstatement Period in Term Insurance.


Will the sum assured change after the reinstatement of a policy?

Some circumstances like changes in the health condition of the policyholder during the reinstatement period may bring about change in the sum assured.

Will the amount of premium be the same after the reinstatement?

The premium amount may change after the reinstatement of a policy according to the terms and conditions of the insurer. 

Can I reinstate my policy term any time after the grace period?

No, there is a definite time after the grace period that is valid for reinstatement. This usually depends on the clauses of the policy document.

Why should I reinstate a lapsed Term Plan?

A Term Plan is one of the best financial cushions that one can provide to his family in his absence. In case of any unforeseen events, Term Plan can help the policyholder’s family survive without compromising on the current standard of living and meeting any other financial obligations. Reinstating such a policy will be more affordable than seeking a new policy.

Disclaimer: The content on this page is generic and shared only for informational and explanatory purposes. It is based on industry experience and several secondary sources on the internet, and is subject to changes.