What to do when policy lapses: Reinstatement Process - Insurance Samadhan

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What to do when policy lapses Reinstatement
Process
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• The Principle of Utmost Good Faith in Insurance
  and Section 45 of the Insurance Act
• Insurance is a contract of utmost good faith,
  where the insurance company accepts the risk on
  your life based on the details given in the
  proposal form. These declarations are accepted in
  utmost good faith by insurance companies, and
  they promise to pay the claim in case the insured
  event, i.e., death, happens.
• However, if death occurs within 3 years of policy
  commencement, then Section 45 of the Insurance
  Act applies, and it is the duty of the insurance
  company to investigate such cases with the
  purpose of finding out if all correct
  declarations were made in the proposal form.
• Renewing and Reinstating Insurance Contracts
• Insurance is also a renewable contract where the
  insured promises to pay a renewal premium as per
  the agreed terms. Premium can be paid in monthly,
  quarterly, half-yearly, or annual mode. If you
  have chosen a monthly mode, then you are allowed
  a 15-day grace period to pay the premium in all
  other modes, a 30-day grace period is allowed.
  Hence, it is necessary that the renewal premium
  is paid within the grace period because the
  contract lapses after the grace period.

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• This lapsed contract can be reinstated within 6
  months or as per the policy of the insurance
  company. However, there is a process of
  reinstatement as detailed below
• Visit the local branch or apply for online
  reinstatement.
• Insurance companies demand a declaration that
  there has not been any change in your health and
  habits. Once again, all declarations are
  important and should be done with honesty.
• Post-reinstatement, the contract once again
  becomes valid as a new contract, and Section 45
  becomes applicable, which means that all claims
  will be investigated if the insured event occurs
  within 36 months of reinstatement.
• This clearly means that insured people have a
  risk of claim rejection every time they go for
  reinstatement. All renewal premiums must be paid
  on time to sustain the validity of the contract.
• Please note that a valid contract guarantees a
  claim after 36 months of policy commencement or
  reinstatement as per the provisions of Section
  45.
• The suicide clause, i.e., death due to suicide,
  is not acceptable within 12 months of a new
  contract or reinstatement.

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• Conclusion
• Avoid reinstatement by paying the renewal premium
  on time and follow the guidelines in case you
  need to go for reinstatement
• Ensure that you fill out the declaration form.
• Make all honest declarations do not take it
  casually.
• Take your self-medical at the time of
  reinstatement and keep it in your record.
• Insurance is a good habit because it tells your
  loved ones that you are a responsible person and
  continue with the habit.
• In case of any questions on reinstatement and
  claims post-reinstatement, reach out to Insurance
  Samadhan. We are there to help you.

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