Reinstatement (Health)

After a premium due date during which a late payment is accepted and coverage stays in force — A grace period is the time after a premium due date during which the policy remains in force even though the premium has not been paid. If the insured pays the premium within the grace period, coverage continues without lapse. If payment is not made by the end of the grace period, the policy lapses and coverage terminates, subject to reinstatement rules. Grace periods protect insureds from accidental lapse due to late payment.

National insurance concept

Termination by the insurer or the insured during the policy period before the policy's expiration date — Cancellation is the termination of a policy during its term, before the policy period has run, and it can be initiated by either the insurer, when policy terms or law allow, or by the insured. A lapse is a distinct event: the policy ends because the insured fails to pay the premium when due and the grace period expires without payment. Because both events end coverage, agents must be precise about which event occurred, since reinstatement options and any surrender values depend on the distinction between them.

National insurance concept