What is Reinstatement of Life Insurance Policy & How to Reinstate Policy in India?

What is Policy Reinstatement in Life Insurance?

When Does a Life Insurance Policy Lapse?

What is the Reinstatement Period in Life Insurance?

How Can I Reinstate My Lapsed Life Insurance Policy?

If your policy has lapsed due to missed payments, you can reinstate life insurance by following a few steps. Here's how it usually works:

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Check the Reinstatement Period

Check the Reinstatement Period to ensure your policy is still within the allowed time for revival.

Contact Your Insurer

Contact the insurer and inform them you want to reinstate your policy.

Pay Overdue Premiums

Pay all overdue premiums, including any interest or late fees.

Submit Health Information

Submit your health details, either a declaration or a medical test, depending on how long the policy has been inactive.

Review, Approval & Policy Reinstatement

After submitting your application and health details, wait for the insurer to review it. Once approved, your policy will be reinstated with its original coverage and terms.

Documents Required for Reinstatement of Life Insurance Policy

To reinstate a life insurance policy, you’ll need to submit a few essential documents. These help the insurance company check your eligibility and process your request smoothly. The exact list may vary slightly depending on the insurer and how long the policy has been inactive, but here are the most commonly required documents:

Original Policy Document

Reinstatement Application Form

Identity Proof

Address Proof

Medical Reports (if required)

Payment Receipts

Income Proof

How Much Does Reinstatement of a Life Insurance Policy Cost?

The cost of reinstating a lapsed life insurance policy typically involves several financial components. While the exact amount varies from insurer and policy  type, the total cost generally includes: 

  • Interest Rates: The interest rate on overdue premiums is typically outlined in your policy’s terms. A standard rate is 6-9% per annum.
  • Medical Tests: If the policy has been lapsed for a long time (typically over 6 months to a year), insurers may require medical tests to reassess your insurability. These tests may be free or chargeable, depending on the insurer.
  • Health Changes: If your health has declined significantly since the policy was first issued, the insurer might still offer reinstatement, but could require higher premium payments than you were initially paying.

 

To get the exact amount you would owe, you must contact your insurance company directly. They can provide a formal calculation of all back premiums, the applicable interest, and any fees.

Example of How Reinstatement Costs are Calculated

Example of How Reinstatement Costs are Calculated

If you missed 2 years' premiums of ₹8,000 p.a., for a sum assured of 1 crore, and the insurer charges a 9% annual interest on pending premiums, the calculation would be:

  • Pending premiums (2 years): ₹8,000 × 2 = ₹16,000
  • Interest: 16,000 × Number of years overdue × 9% = ₹2,880 (excluding medical fees)
  • Total Revival Amount: ₹16,000 + ₹2,880 = ₹18,880

How Long Does the Life Insurance Reinstatement Process Take?

What Happens to Your Policy Benefits After Reinstatement?

What Happens if Policy Reinstatement is Rejected?

Sometimes, after applying for reinstatement of a lapsed life insurance policy, the insurer may reject the application for several reasons. Here is what typically happens:

  1. Your life insurance policy remains lapsed and inactive
  2. The insurer will send you a formal rejection letter, explaining the reason for rejection
  3. You will not be entitled to any benefits under the policy, and no claim can be made
  4. The premiums you paid during the lapsed period are usually not refundable

Why Do Insurance Companies Reject Reinstatement?

Can I Apply for a New Policy if Reinstatement Is Rejected

Can I Apply for a New Policy If Reinstatement Is Rejected?

Absolutely. If reinstatement is not possible or rejected, your only option is to apply for a new life insurance policy. Keep these points in mind:

  • The new policy will have new terms
  • The sum assured may be different
  • You’ll have to undergo medical tests again
  • The new policy may cost more if your age has increased or your health has deteriorated.

 

Alternatively, you can choose from term, endowment, or ULIP plans based on your needs.

Reinstatement vs New Policy: Which is Right for You?

If your life insurance policy has lapsed, you have two options: reviving the old policy or applying for a new one. Understanding when each option makes sense can help you make the right decision.

Reinstatement Is Likely Best A New Policy Might Be Better
Your old policy fits your needs, and the original premiums are affordable. You want updated features or more flexible coverage.
Usually lower, based on original rates May be higher due to age or health conditions
You want to preserve bonuses/riders/tenure and avoid new underwriting. The policy has lapsed long ago, and your needs have changed or better product offerings
Faster if revival is straightforward and within the window Slower, involves fresh application, documentation, and underwriting
Favourable if health has worsened since the original policy  Favourable if health has improved

If your previous policy was well-suited to your needs and reinstatement is affordable, it’s often the smarter choice. But if your needs have changed or better options are available, exploring a new policy could be worth it.

Difference Between Life Insurance Renewal and Reinstatement

Here’s a simple table comparing Renewal and Reinstatement in life insurance:

Feature  Renewal (On Time) Reinstatement (After Lapse)
Timing  Before or within the grace period After the grace period, within the insurer’s revival period
Coverage Status Policy remains active Policy is inactive until revived
Process Just pay the premium Submit request, pay dues, may need health checks
Cost Regular premium Premiums + interest + possible medical costs
Medical Requirements Usually none May require a health declaration or medical tests
Risk of Losing Benefits None High, if not revived within the allowed time
Time Taken Instant or same day It may take days or weeks for approval.

Benefits of Reviving a Lapsed Life Insurance Policy

Tips to Avoid Life Insurance Policy Lapse in Future

Here are quick tips to avoid your life insurance policy from lapsing:

  • Set up auto-debit for premium payments.
  • Use calendar or phone reminders for due dates.
  • Keep your contact details updated with the insurer.
  • Maintain enough balance in your bank account.
  • Pay within the grace period if you miss a due date.
  • Review your policy once a year.
  • Talk to your agent if you face financial issues.

FAQs about Reinstatement of Life Insurance Policy

Can I reinstate a life insurance policy after 5 years?

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No. Insurers allow reinstatement within 2 to 5 years from the date the policy lapsed. After this period, revival is usually not possible.

Do I need to undergo a medical test for reinstatement of a life insurance policy?

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Not always. If the policy has been inactive for a short time, a health declaration may be enough. But if it’s been lapsed for a longer period, insurers may ask for medical tests or updated health reports.

What happens to bonuses if the life insurance policy is reinstated?

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If you revive the policy within the allowed time, accumulated bonuses and benefits are restored. But if you don’t reinstate it, those bonuses may be lost permanently.

Is there a difference between revival and reinstatement?

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Yes. Reinstatement usually refers to restoring a policy within the grace period, while revival happens after the grace period ends, often requiring extra steps like paying dues and submitting health documents.

Will my premium change after reinstatement of the life insurance policy?

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It can, if your health has changed or the insurer reassesses your risk, they may increase your premium or add exclusions. If not, original premiums are often retained.

Can all types of life insurance policies be reinstated?

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Yes, Most policies, like term, endowment, and ULIPs, can be reinstated, but the rules may vary depending on the insurer and policy type.

Can I reinstate my life insurance policy online or do I need to visit a branch?

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Yes, you can. Most insurers now offer digital reinstatement options via their websites or mobile apps. However, if medical tests are required, you may need to visit a diagnostic center or branch.

Do I need to pay interest on overdue life insurance premiums?

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Yes. Insurers usually charge simple interest (6–9% annually) on unpaid premiums during the lapse period.

Will my life insurance riders and bonuses be reinstated, too?

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In most cases, yes. Riders and accumulated bonuses are restored if the policy is revived within the allowed period.

What happens to nominee rights during the reinstatement of a life insurance policy?

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Nominee details remain unchanged unless you explicitly update them during the reinstatement process.

Can I reinstate a life insurance policy through a third-party agent or only directly?

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Yes, you can initiate reinstatement through authorised agents, but final approval and documentation must go through the insurer.

Do life insurers offer grace extensions or revival campaigns?

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Yes. Some insurers run limited-time revival campaigns with relaxed medical checks and waived penalties.

What if I had a life insurance policy loan before the lapse?

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You need to repay the loan and accrued interest before reinstatement is approved.

Can the reinstatement of a life insurance policy be rejected even if I meet all conditions?

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Yes. If your health risk has significantly increased, or if there's misrepresentation, insurers can reject reinstatement.

What are the hidden costs of life insurance reinstatement?

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Besides paying overdue premiums and interest, reinstating a life insurance policy may involve additional costs such as medical test fees, repayment of any outstanding policy loans, and processing or courier charges if done offline. These costs are typically borne by the policyholder and are not refundable, even if the reinstatement is declined.

Can I change the sum assured or add/remove riders at revival?

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No, you generally cannot change the sum assured during revival. Riders may be added or removed only if the insurer allows it, and subject to fresh underwriting. Most insurers treat revival as a continuation of the original contract, not a new policy.

Can I make a life insurance claim for a death that occurred during the lapse period?

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No, claims are not payable if the death occurred after the grace period and before the policy was revived. The policy is inactive during this time, and no benefits are payable.

I was diagnosed with an illness during the lapse. Can I still revive?

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Yes, but it depends on the insurer. You must disclose the illness, and the insurer may reject the revival or increase your premium after reassessing your health risk.

Are medical test fees refundable if my revival is declined?

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No, medical test fees are usually non-refundable, even if the revival is declined. These costs are borne by the policyholder unless the insurer explicitly states otherwise. There is no fixed limit on the number of revivals, but each revival must occur within the revival period (typically 2–5 years from lapse) and is subject to insurer approval.

Can NRIs/overseas policyholders revive a life insurance policy while abroad?

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Yes, NRIs can revive policies from abroad through mail-order business or video medicals, depending on the insurer. All documents and medicals must be submitted as per insurer guidelines.

What disclosures do I need to make for reviving a life insurance policy?

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You must disclose your current health status, lifestyle habits, occupation changes, and financial details to revive a lapsed life insurance policy. A declaration of good health and possibly medical tests are required.

What proofs should I keep after reviving a life insurance policy?

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After reviving a life insurance policy, keep the revival confirmation letter, payment receipts, medical reports (if any), declaration of good health, updated policy bond, and all communication records with the insurer. These documents serve as proof and help in future claims or resolving disputes.

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