Reinstating Global Life Insurance: Is It Possible?

Life insurance is a financial protection tool that provides a lump-sum payout to your dependents in the event of your death. However, if you stop paying the premiums, your policy will lapse, and your coverage will end. The good news is that, in many cases, you can reinstate your global life insurance policy and resume coverage. Here's what you need to know about reinstating a lapsed life insurance policy.

Grace periods

If you die during the grace period without paying your premium, your insurer is legally required to still review your beneficiaries' claims for the payout, though missed payments will be deducted from the total payout. During the grace period, you can reinstate your life insurance policy simply by paying the outstanding premium and any associated late fees.

If you don't make a payment on a term life insurance policy during the grace period, your policy will lapse. That means your policy will no longer be in force. If you have a permanent life insurance policy, such as a whole life insurance policy, you might be able to go longer without making payments. If your policy has cash value built up, you could use it to cover premium payments.

If you don't make a payment during the grace period, your policy will lapse at the end of it. However, many insurers will allow you to reinstate your policy if you are willing and able to pay your overdue premium shortly after the policy lapses. Often, insurers will give you an additional 15- to 30-day time buffer to reinstate your policy without needing to go through a whole reinstatement process with a new application.

Reinstatement After Grace Period

After the grace period ends, the life insurance company may still permit the reinstatement of a policy. The insured may be required to make legally binding statements about their health. For example, the insured may have to identify significant, potentially harmful changes in health that occurred after the policy lapsed. If the insured developed a major health condition during that time, the insurance company might decline reinstatement.

Reinstatement Within 30 Days of Lapse

After the nonpayment of a life insurance premium, a policy enters its grace period. During the grace period, the insurance company remains responsible for paying death benefits on valid death claims. If the insurance company does not receive a premium payment during the grace period, the policy will lapse. At this point, the insurance company is no longer responsible for paying a claim.

A life insurance policy may typically be reinstated within 30 days of a lapse without additional paperwork, underwriting, or attestations of health. Insureds often pay a reinstatement premium, which is larger than the original premium. Insurance companies add the additional reinstatement premium to the accumulated cash value of the policy and pay administrative expenses incurred from the lapse.

Reinstatement After 30 Days of Lapse

After the grace period ends, the life insurance company will still allow a life insurance policy owner to reinstate a policy, but the insured person must make some legally binding statements about their health. If the insured person lies about anything material, it may be grounds for the insurance company to deny a death claim in the future.

Reinstatement within 30 days of a lapse

If you miss a premium payment on your life insurance policy, your policy will enter a grace period, during which your insurance company remains responsible for paying death benefits on valid death claims. This grace period typically lasts 30 days, but can be longer, and during this time, you can reinstate your policy by simply paying the outstanding premium and any associated late fees. If you reinstate your policy within this time, you won't need to provide any additional paperwork, underwriting, or attestations of health. However, you will likely have to pay a reinstatement premium, which is larger than your original premium.

If you reinstate your policy within this 30-day grace period, your insurance company will add the additional reinstatement premium to the accumulated cash value of the policy and use it to pay administrative expenses incurred from the lapse. This is a much simpler process than if you were to wait until after the grace period to reinstate your policy, which could require you to submit a new application and provide evidence of insurability.

In California, for example, the grace period is at least 30 days following the premium due date, and due to financial difficulties experienced during the COVID-19 pandemic, most life insurance companies have extended their grace period to 60 or 90 days. During this time, your policy is still in effect, and if the insured party passes away, the insurance company must pay out on the claim, although they will likely deduct any missed premiums from the benefits payout.

If you reinstate your policy within 30 days of a lapse, you can avoid the more complicated reinstatement process, but it's important to act quickly. The sooner you reinstate a lapsed policy, the better. If you wait too long, you might be denied coverage.

Reinstatement after 30 days of a lapse

If you miss a premium payment on your life insurance policy, you typically have a 30-day grace period to pay back the owed premium without the policy lapsing. If you miss this window, your policy will lapse, and your insurance company is no longer responsible for paying a claim.

After the grace period ends, your life insurance company may still allow you to reinstate your policy. However, you may be required to make legally binding statements about your health. For example, you may have to identify significant, potentially harmful changes to your health that occurred after the policy lapsed. If your health has deteriorated, the insurance company might decline reinstatement.

Additionally, if you provide fraudulent information when applying for reinstatement, the insurance company has grounds to deny a death claim. After six months from the termination of the policy, an insurance company will usually require you to go through the underwriting process again for reinstating an insurance policy. This means that a health concern may be uncovered, making reinstatement difficult or impossible.

The reinstatement process is not the same for every type of insurance policy or upheld in the same way by every insurance company. Some life insurance companies may allow the reinstatement of a policy even if the insured has gone past its grace period. However, reinstatement requirements may vary among life insurance providers. There is no guarantee by law for reinstatement terms.

Reinstatement with underwriting

As people tend to face more health issues as they age, full underwriting means there is a higher likelihood of the insurance company uncovering a health concern that may make reinstatement difficult or impossible.

To reinstate a lapsed life insurance policy, the policyholder must make an application for the revival of the life insurance policy to the insurance company. The insurance company will require the policyholder to fill out and submit a revival form. It is recommended that the policyholder contacts the insurance company or visits their nearest branch office to get a full understanding of the process.

The reinstatement process is not the same for every type of insurance policy and is not upheld in the same way by every insurance company. Reinstatement requirements may vary among life insurance providers, and there is no guarantee by law for reinstatement terms.

Benefits of reinstatement

Reinstating a lapsed life insurance policy has several advantages. Firstly, it ensures that you continue to have the necessary coverage, protecting yourself and your family from financial risks. This is especially important if you have dependents who rely on you for financial support.

Secondly, reinstating a policy can often be more cost-effective than applying for a new one. When reinstating, you'll likely pay less because your insurer will honour the original pricing, provided your health hasn't changed. If your health has deteriorated, your rate may be affected, but your age won't be a factor, as the premium will still be based on your age when you first applied.

Reinstating a lapsed policy can also provide an opportunity to negotiate more favourable terms. For example, you may be able to secure lower premiums or increased coverage limits, especially if your circumstances have changed since the initial policy was taken out.

Additionally, reinstating a policy within the time frame set by the insurer may qualify you for a "life insurance grace period," during which no additional fees or interest are charged. This can save you money on premiums and give you a chance to catch up on missed payments without incurring extra penalties.

Finally, reinstating a life insurance policy ensures that all the effort and work put into finding the right coverage in the first place doesn't go to waste. It provides peace of mind that your family will be protected financially should something unexpected happen to you.

Frequently asked questions