What is "policy reinstatement"?

Policy reinstatement refers to the process of restoring a previously lapsed life insurance policy after it has not been maintained for a specified period, typically due to non-payment of premiums. When a policy lapses, the coverage is no longer in effect, and the insured loses their benefits. However, many insurance companies offer a reinstatement option, which allows the policyholder to regain coverage by paying any back premiums and possibly providing evidence of insurability.

This is an important feature in life insurance, as it provides policyholders with an opportunity to restore coverage without having to go through the process of applying for a new policy, which may involve re-evaluating their health status. Different companies may have distinct rules regarding reinstatement, including a time limit for the opportunity to reinstate, which is generally defined in the policy's terms.

The other options do not accurately describe policy reinstatement, as they cover different aspects of life insurance management. Changing beneficiaries pertains to the legal modification of who will receive benefits upon the insured's death, while transferring a policy to another company involves completely taking the policy elsewhere instead of restoring it. Issuing a new policy after a claim is about initiating a new contract, rather than reinstating an existing one that has lapsed.