Insurance has been around since people have realized it should be.

1. Lapses in Insurance
Coverage

2. Insurance has been around since people have
realized it should be. Yet sometimes, we cannot
avoid not paying for our premiums especially
when we encounter financial instability. These
are called lapses. Westhill Insurance Consulting
gives you the outlines of what you should
review once you missed paying your premiums.

3. GRACE PERIOD MUST HAPPEN BEFORE
LAPSE
To prevent a life insurance policy from lapsing each and every time a
premium payment is slightly late, every state in the country requires
that a life insurance policy first go through what is known as a grace
period after a payment is missed. This is a period of time (usually 30
days) where despite the missed payment; the insurance policy will
still provide coverage and make a full payout if the insured dies.

4. Only after the grace period has passed without receiving the due
premiums can the life insurance company consider the policy to be
lapsed. Once a life insurance policy lapses the life insurance
company is not under any legal obligation to pay the beneficiaries if
an insured person passes away.

5. MOST POLICIES CAN BE REINSTATED
AFTER LAPSING
After a policy first lapses, the owner may have the option to reinstate
the policy. You want to make sure that you reinstate your policy as
quickly as possible after a lapse. Different companies have different
rules for reinstatement so you shouldn’t file a complaint or burst into
frustrations when your insurance company refuses to reinstate your
policy as it should already be stated when you were reading the
terms before you signed for the coverage.

6. IMPORTANCE OF REINSTATEMENT
PERIOD LAPSE
The reinstatement period is very important to policy owners and insured persons
for a couple of reasons. The first reason is as discussed, the insured person may
not need to go through the underwriting process. If a person has had a major
health change, he/she may not necessarily be aware of the change. The
underwriting process may uncover more about a person’s health than they ever
knew, for better and worse. Avoiding underwriting when possible almost
always leads to lower insurance premiums.

7. The second reason the reinstatement period is very important is that
even with the same health rating, a new life insurance policy will
always be more expensive than an old policy, because the insured
person has aged. The older the insured person, the higher the rates
will be, all else being equal. The bottom line is: Reinstating a life
insurance policy rather than taking out a new policy will save
money.

8. REINSTATEMENT WILL COST MORE
THAN ONE MONTH PREMIUM
After a policy has lapsed, a larger payment must be made to reinstate
the policy. It is in the best interest of a policy holder never to let a
policy lapse. Developing cities like Bangkok, Thailand, Jakarta,
Indonesia and Kuala Lumpur, Malaysia are strict in reinstatement
and its cost as personal insurance are rare.
References:
https://groups.diigo.com/group/westhill-healthcare-consulting
https://www.linkedin.com/groups/Westhill-Consulting-Insurance-
5110019