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Also, the matters contained in the following were written in accordance with the law, rules, and jurisprudence prevailing at the time of writing and posting, and do not include any future developments on the subject matter under discussion.
AT A GLANCE:
Under the Insurance Code of the Philippines, the policy owner must be given the opportunity to reinstate the policy at any time within three (3) years from the date of default in premium payment.
Reinstating a lapsed life insurance policy is a process governed by specific rules and conditions. Typically, stipulation often exists in policies, providing the insured the privilege to reinstate it within a specified timeframe under certain conditions.
In fact, the Insurance Code of the Philippines requires every insurance policy to contain a provision that the policyholder shall be entitled to have the policy reinstated at any time within three (3) years from the date of default of premium payment. (Section 233, Insurance Code)
However, it is important to note that reinstatement is not a right but is subject to the discretion of the insurance company whether to reinstate the lapsed policy or not.
Jurisprudence says:
The stipulation in a life insurance policy giving the insured the privilege to reinstate it upon written application within three years from the date it lapses and upon of evidence of insurability satisfactory to the insurance company and the payment of all overdue premiums and any other indebtedness to the company, does not give the insured absolute right to such reinstatement by the mere filing of an application and therefor.
The company has the right to deny the reinstatement if it is not satisfied as to the insurability of the insured and of the latter does not pay all overdue premiums and all other indebtedness to the company. After the death of the insured the insurance company cannot be compelled to entertain an application for reinstatement of the policy because the conditions precedent to reinstatement can no longer be determined and satisfied. (James Mcguire vs. The Manufacturers Life Insurance Co., G.R. No. L-3581, September 21, 1950)
From the aforementioned, it can be gleaned that life insurance policies include provisions allowing reinstatement within a specific period, commonly three years from the date of lapse. To exercise this privilege, the insured must submit a written application and provide evidence of insurability satisfactory to the insurance company.
Furthermore, the insured is required to settle all overdue premiums and any other indebtedness to the company. As mentioned, reinstatement does not grant the insured an absolute right to reinstatement by merely filing an application. The insurance company retains the authority to deny reinstatement if it is dissatisfied with the insured’s insurability or if the overdue premiums and other debts remain unpaid.
While the provision for reinstatement offers a valuable opportunity, policyholders must be aware that it is not an absolute right and is subject to the discretion and conditions set by the insurance company.
Read also: What are the grounds for the rescission of an insurance contract?
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