Definition of 'Reinstatement'
1. The process of re-establishing the status of a person, company or law.
2. In regards to insurance, reinstatement allows a previously terminated policy to resume active coverage. Depending on the circumstance of the termination, such as failure to pay the premium, the insured person may be required to compensate the insurer before reinstatement occurs.
Investopedia explains 'Reinstatement'
1. For example, the government may reinstate prohibition, making it illegal to consume or exchange alcohol.
2. Reinstating the policy would provide the insured with all the benefits of their original plan. In case of non-payment, the insured may be required to provide evidence of eligibility, such as taking a medical examination for life insurance. Additionally, the person might have to pay the insurance company for the missed premium dates.