In Force
What Does In Force Mean?
“In force” is an insurance term that means a policy is currently active and providing coverage in return for premium paid as agreed. The phrase “in force” refers to the status of the policy at the time it is evaluated.
This applies when a policyholder has been paying their premiums according to the payment agreement or has paid them in full. When a policy is deemed “in force,” the policyholder is entitled to its benefits. The length of time the policy remains in force, as well as the conditions under which it will lapse due to missed payments or be voided, will be clearly outlined in the agreement.
In many cases, if a policy lapses, it can be reinstated according to the insurer’s terms. If the lapse is due to non-payment, the policyholder must bring payments up to date within a specified time frame to have the policy reinstated.
In Canada, some types of insurance are mandatory (such as minimum coverage for car insurance), while others are optional. It is important to read and understand your policy terms and options before purchase. If immediate review isn’t possible, a grace period is typically provided to review the policy details before final acceptance.
Insuranceopedia Explains In Force
When purchasing an insurance policy, you enter into a legally binding contract with the insurance company. This contract outlines the terms of compensation—what is covered and when—and in return, you agree to pay an annual premium according to the specified payment schedule. The contract will also specify when coverage begins and ends. Once the payment terms are agreed upon and the initial payment is made, the policy is deemed “in force,” and coverage starts.
If a person pays their premiums regularly or pays the policy in full, their insurance remains in force, ensuring coverage for the risks they have insured. Essentially, if an accident or loss occurs, they will receive the insurance payout for the amount they have purchased.
The contract also details the conditions under which a policy may lapse, meaning it is no longer in force. For instance, if a policyholder falls behind on payments, the policy may lapse.
If your policy includes a reinstatement option, you can restart the coverage by meeting the reinstatement terms, often as simple as bringing the premiums up to date. It’s important to note that most insurers set a time limit for reinstatement. If this time passes, the policy is voided or canceled, and a new application and contract will be required.
Reinstating a lapsed policy can affect factors like rates, payment terms, and available options. There are advantages and disadvantages to reinstating a policy, especially in life insurance, where changes in age or health can significantly impact a new policy. For this reason, it is generally advisable to keep insurance policies in force whenever possible.
