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Reinstating a cancelled mortgage life insurance policy

Having a cancelled policy does not mean you have to say goodbye to your mortgage life insurance cover.

When is your policy cancelled?

Cancellation due to unpaid premiums:

It goes without saying that premiums need to be paid on time. However, most insurance companies provide a grace period (usually around 30 days) where the coverage is still in place even when the premiums have gone overdue. After that grace period, the policy will be considered lapsed, subject to the terms and conditions stated in the contract.

Cancellation due to your own decision:

You can also cancel the policy within the “Free Look” period. All premiums will be refunded if you cancel within the free look period.

You can still cancel your policy after the free look period has passed but no premiums will be refunded.

You still have the chance to have the policy reinstated. Depending on the insurance company, your policy can still be reinstated from 1 year to 3 years after it has lapsed.

This is as long as the cancellation is due to failure to pay for premiums and not for any other reasons (such as your substantial misstatement of key facts with regards to your health or employment).

To apply for a reinstatement, you usually are required to submit:

Please note that when you have a cancelled policy, the insurance company reserves the right to deny your application for reinstatement on the basis of changes on your health condition or on your employment. During the time that the policy lapsed until you apply for the reinstatement, you may get sick or get into an accident and be considered uninsurable.

Thus, to avoid this possibility and the hassles involved in having your policy reinstated, it is best that you try your best to keep your policy in force for the entire duration of the mortgage.

When the insurance company agrees to the reinstatement, however, you should remember that any waiting periods will be reset. This means that if you have a waiting period of 6 months, you have to wait out that six months starting from the date the policy was reissued for some conditions that are excluded during the waiting period.

Latest update: 16.06.2013

Get your mortgage life insurance quote now, fill our form on the right.

Other sites: critical illness cover, lifeassurance.org.