Life Insurance Lapses and Reinstatement at a Glance
- If you miss a life insurance payment, your policy usually won’t be cancelled right away. Most policies have a grace period, so your coverage stays active for a short time after a missed payment.
- The most common grace period is about 30 days.
- If your policy lapses, many insurers give you a chance to restore your original coverage during a reinstatement period.
- To reinstate your policy, you’ll usually need to pay any missed premiums. Depending on how long it has been, you might also need to provide updated health information or medical records.
Can You Reinstate a Lapsed Life Insurance Policy?
During the grace period, your policy remains in force. Contact the insurer and pay the overdue premium before the grace period ends.
If your policy has already lapsed, many insurers allow reinstatement for a limited period, often up to two years after the lapse date. The exact timeframe depends on the policy and applicable provincial law.
During the reinstatement period, the insurer may request:
- a completed reinstatement application;
- payment of all missed premiums and other amounts owing; and
- a health checkup, questionnaire or other medical information.
If the reinstatement period has expired, you will generally need to apply for new coverage and qualify under the insurer’s current underwriting requirements.
If My Life Insurance Coverage Has Lapsed, Should I Buy a New Policy?
If you are still healthy, or healthier than when you first applied, it can be a good idea to research what other providers are offering. You can use MyChoice to compare life insurance quotes before deciding whether to reinstate your existing policy or purchase new coverage.
If your health has changed significantly since the policy lapsed, an insurer may decline reinstatement or require additional medical evidence before approving it.
Also consider the missed premiums, interest and other amounts required for reinstatement, as well as the guarantees and benefits under the existing policy.
What Happens If You Die During the Grace Period?
In Ontario, if you die during the statutory grace period, your beneficiaries may still receive the death benefit. The insurer may deduct the overdue premium and permitted interest from the payment.
Rules vary by province and policy. If the grace period has ended, the insurer must determine whether the policy lapsed or remained in force through another provision.
If you have a whole or universal life policy that accumulates cash value, the insurer may use these funds to keep the policy going. Once that money has been used, the policy may lapse.
Family members who are unclear about the status of a life insurance policy should contact the insurer after the death of the policyholder.
How to Prevent a Life Insurance Policy From Lapsing
- Set up pre-authorized payments. By ensuring your payments are automated, you’re less likely to miss a monthly or annual payment.
- Update any credit-card changes. If your card expires or you receive a new one, let the insurer know.
- Read the fine print. Be aware of your insurer’s grace period and the date by which an overdue premium must be paid.