Reinstatement Premium

What Does Reinstatement Premium Mean?

A reinstatement premium is a payment required to reactivate an insurance policy after coverage has lapsed. Reinstatement premiums are commonly associated with life insurance, as policyholders often choose to resume coverage after their term life policies have expired. Whether it makes sense to reinstate or buy a new policy depends on your original rate compared with your current age and health, both of which influence the cost of a life insurance premium.

Insuranceopedia Explains Reinstatement Premium

Coverage can sometimes cease before the policy’s actual expiration date, typically when a policyholder fails to make timely premium payments. In such cases, the policyholder may be required to pay both the missed premium payments and a reinstatement premium to restore coverage. However, reinstatement is not guaranteed, and insurance companies may decline to reinstate the policy if too many payments have been missed. If the insurer refuses, the alternative is shopping for a new policy and comparing quotes from the best life insurance companies.