What Does Reinstatement Premium Mean?
A reinstatement premium is a premium that must be paid to activate an insurance policy again after the coverage has ceased. Reinstatement premiums are commonly used in life insurance because people often decide that they want to continue receiving life insurance coverage after their term life policies expire.
Insuranceopedia Explains Reinstatement Premium
Sometimes coverage ceases before the actual expiration date of the policy. This can happen if a policyholder does not make payments on time. In such situations, the policyholder may be required to pay for any missed premium payments in addition to a reinstatement premium in order to get coverage reinstated. However, this is not guaranteed and insurance companies can refuse to reinstate the coverage if the policyholder misses too many premium payments.