Reinstatement 復效

What Reinstatement Means 復效的意義

If a premium remains unpaid when the grace period ends and nothing else, such as an automatic premium loan, keeps the policy in force, the policy lapses. Reinstatement means restoring the lapsed policy to force under its terms.

The reinstatement provision gives the policyholder a right to apply to revive the original policy, but that right is conditional and does not operate automatically. The time limit and exact conditions depend on the wording of each policy, so candidates should not assume all policies are the same.

Usual Conditions for Reinstatement 復效的一般條件

Common conditions are: (1) applying within the period stated in the policy; (2) providing evidence of insurability satisfactory to the insurer, such as a health declaration or medical examination report; (3) paying all overdue premiums with interest; and (4) repaying or re-establishing any outstanding policy loan with interest.

The insurer asks for evidence of insurability to guard against anti-selection, because people whose health has worsened have a stronger motive to restore cover. After a short lapse the insurer may ask only for a simple health declaration. If the risk on the life insured has clearly increased, it may decline the application or deal with it according to the policy terms and its underwriting standards.

A policy that has been surrendered for its surrender value has come to an end and generally cannot be reinstated. A policyholder who still needs cover would normally have to apply for a new policy.

Reinstatement Compared with the Grace Period and a New Policy 復效與寬限期及新保單的分別

During the grace period the policy is still in force, so the policyholder only has to pay the premium and need not give evidence of insurability. Reinstatement comes after the policy has lapsed, the insurer's conditions must be met, and cover resumes only once the application is approved.

Compared with a new policy, premiums on a reinstated policy are generally still based on the original entry age, which usually makes them lower than premiums at the current age. The original terms are also kept, and the accumulated cash value and policy duration can continue.

However, reinstatement requires the arrears to be cleared in one go, which can be a short-term strain. If the arrears are large or the original policy no longer suits the policyholder's needs, the policyholder should compare the total cost and cover of reinstatement and a new policy before deciding.

Effects and Limits of Reinstatement 復效的法律效果及限制

Reinstatement does not backdate cover to events during the lapse. If the life insured dies during the lapse, before the application is approved and with no nonforfeiture benefit such as extended term insurance in force, the insurer generally does not have to pay the original sum insured.

An applicant for reinstatement must also observe utmost good faith and disclose material facts truthfully. Many policies provide that a new contestable period runs from the reinstatement date for statements made in the application. So even if the original policy has passed its contestable period, the insurer may still be able to challenge the reinstatement for misrepresentation in that application. Whether a suicide clause restarts also depends on the policy wording.