What Does Reinstatement Mean?
Reinstatement is the act of claiming a position after it has been removed from a person or an entity. In terms of insurance, it means that the policyholder gets back the policy after it has become void for lack of payment.
Insuranceopedia Explains Reinstatement
If a policyholder misses out on a payment for a premium, the insurance company will give him or her a grace period before it terminates the policy. If the policyholder pays within the grace period, then it also validates the policy. However, if the policyholder is unable to pay during the grace period, the policy becomes invalidated. He or she can no longer make claims from it. Should the policyholder wish to be covered under the same policy again, he or she might go back to another underwriting process. For instance, if the policy is life insurance, then he or she might need another health assessment. In the United States, there is no law specific to reinstatement. The procedure and the cost vary depending on the type of policy and insurance company. In fact, it might be even possible that a new policy can be cheaper than a reinstated one.