In order to keep a low cost life insurance policy in place, monthly premiums have to be paid and all of the rules and regulations set out in the policy document have to be followed. It can, however, be alarmingly easy to mess up and not do something that you are contracted to do in terms of your policy. Premium payments could be missed or a document not provided to your insurance company on time and, as soon as something occurs that is contrary to the terms of your policy, your insurance company will have the right to cancel your policy.
The Reinstatement Clause
A policy that has been canceled by an insurance company because a policy owner did not comply with the policy terms can, under certain circumstances, be reinstated. Each policy should contain a Reinstatement Clause setting out exactly how and when that policy can be reactivated after termination by the insurance company. This Reinstatement Clause will contain a list of the terms and conditions that would have to be complied with before the insurance company will review the case to determine whether or not to reinstate the policy. A typical term that is contained in most, if not all, reinstatement clauses is that all outstanding premiums have to be paid before an insurance company will consider reactivating a policy.
Even though a delinquent policy holder may comply with all the terms and conditions as set out in the Reinstatement Clause, an insurance company still has the right to refuse to reinstate the terminated policy and reinstatement is therefore not automatic. An insurance company will not, however, make this decision lightly or