Reinstatement/Revival

Reinstatement is the process by which a life insurance company puts back into force a policy that has either been terminated because of non payment of premiums or has been continued under one of the non forfeiture provisions

 Conditions of Policy Revival:

• Payment of outstanding premium with interest
• Fee for reinstatement
• Proof of continued good health & income
• No increase in Risk cover
• Within time frame - in India within 5 years from the date of Lapse
• Payment of outstanding loan
• Fresh medical examination may be required if SA is large

Revival is more often advantageous because buying a new policy would call for a higher premium based on age on the date of revival

Documentation - Policy Condition

Grace Period

• The "Grace Period" Clause grants the policyholder an additional period of time to pay the premium after it has become due
• The standard length of the grace period is one month or 31 days computed from next day after due date.
• The premium however remains due and if policyholder dies during this period, the insurer may deduct the premium from the death benefit. if premium remain unpaid even after grace period is over, the policy would then be considered lapsed and the company is not under obligation to pay the death benefit but for the amount under Non Forfeiture provisions.

Lapse

If the policy premium has not been paid even during days of grace, the policy is deemed to be lapsed.

Policy Document

• It is the evidence of the contract between he assured and the insurance company.
• If the insured person loses the original life insurance policy document, the insurance company will issue a duplicate policy without making any changes to the contract.
• It has to be signed by the competent authority and stamped according to indian Stamp Act

Policy Document Components

•  Policy Schedule 

        It contains Policy owner's name & address, DOB, Age, Plan & Term, Whether the policy is            Par/Non Par, Mode of Premium, Policy no, DOC, SA, Premium paid, Nominee, details of riders etc.,

• Standard Provision 

These are normally present in all LI Contracts. These Provisions define the rights and privileges and other conditions viz; days of grace, non- Forfeiture in case of Lapse

• Specific Policy Provisions

These may be printed on the face of the document or inserted seperately in the form of an attachment

Eg: A clause precluding death due to pregnancy for a lady who is expectingat the time of writing the contract

Documentation - Policy Condition - I

First Premium Receipt (FPR)

An Insurance contract commences when the life insurance company issues a FPR.
The FPR is the evidence that the policy contract has begun

FPR contains the following information's:

1. Name and address of the life assured
2. Policy Number
3. Premium amount paid
4. Method of frequency of premium payment.
5. Next due date of premium payment
6. Date of commencement of the risk
7. Date of final maturity of the policy
8. Date of payment of the last premium
9. Sum assured

The company may require a moral hazard report from an official of the insurance company