How you can reinstate your lapsed insurance policy. Follow these simple steps

Life is unpredictable. While meeting daily responsibilities, some things fall through the cracks. For many, this includes missing insurance policy premium payments. When this happens, the policy can lapse, leaving you and your loved ones vulnerable without coverage.

The good news is that in most cases, a lapsed insurance policy can be reinstated. Here's how you can go about reinstating your policy, and why acting quickly is essential.

When an insurance policy lapses due to non-payment of premiums, reinstating it can be crucial to continue the coverage and avoid buying a new policy at higher rates.

A policy lapses when you fail to pay the premium within the grace period specified by the insurance provider. Once lapsed, the coverage and benefits associated with the policy are no longer in effect. If the unexpected happens during this time — be it a medical emergency or loss of life — the benefits that the policy was intended to provide will not be available. Essentially, the safety net you once had is gone.  

Steps to reinstate your policy

Reinstating a lapsed policy is usually straightforward, though it may come with certain conditions depending on how much time has passed. Here’s what you need to do:

Contact your insurer: Most insurers allow a grace period (usually 30 days) after the lapse during which you can reinstate the policy without additional formalities. However, the more time passes, the more complicated the process can become.

"Most insurers allow reinstatement within a specified grace period, typically 30 days for life insurance and up to 15 days for health policies (depends on the plan and insurer)," said Rakesh Goyal, Director at Probus.

Submit a reinstatement application: After the grace period, insurers typically require a formal request for reinstatement. This may involve filling out a reinstatement application form and submitting relevant documents.

Pay outstanding premiums and late fees: To reinstate the policy, you’ll need to pay any missed premiums. Some insurers may also charge interest or penalties for late payments. The longer you wait, the higher these costs could become.

"To reinstate a lapsed policy, policyholders need to submit a reinstatement application, pay any outstanding premiums with interest or penalties, and may also undergo a medical examination depending on the insurer's requirements," said Goyal.

Time is a critical factor when reinstating a lapsed insurance policy. The longer your policy remains inactive, the higher the risk of losing your insurance. Life circumstances can change rapidly, and developing a medical condition during this lapse could lead to higher premiums — or worse, a denial of reinstatement. Acting swiftly reduces this risk and ensures you continue to have the coverage you need.

Additionally, Goyal said, "The key is acting quickly, as prolonged delays could lead to stricter terms or even refusal by the insurer. Reinstating early also prevents the lapse from affecting one's claim history, potentially resulting in increased premiums. Some insurers offer special programs or initiatives to assist policyholders with the reinstatement process, such as waiving late fees. Understanding your policy's terms and conditions is crucial to avoid lapses in the future and ensure continuous protection."