Published: | Updated: November 17, 2017

Definition - What does Discontinuance mean?

Discontinuance refers to the termination of an insurance contract, often because the policyholder fails to pay the premium. It is made legitimate by the insurer issuing notification tot he insured.

Insuranceopedia explains Discontinuance

Discontinuance, especially in a health group coverage, is not a short and abrupt process that starts with the non-payment of premiums. If the sponsor decides to terminate insurance by non-payment, the insurance company is still liable for claims during the grace period. There is also a period for extension of coverage even when the sponsor has another insurer. The insurer must also notify all the people who will be affected by the discontinuance for it to become truly valid.

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