Reinstatement Clause – continued enhanced flexibility

Reinstatement Clause updated to spread repayments over 12 months

Ensuring customers are able to maintain their protection in place is more important now than ever. Earlier his year, we introduced additional flexibility to the Reinstatement Clause to help customers. This additional flexibility was due to expire shortly but we are delighted to confirm that it will continue to apply for customers until the end of January 2021.

Zurich’s Reinstatement Clause – a reminder

Zurich’s Reinstatement Clause allows a customer, or their family, to reinstate a lapsed policy, provided they act within a certain timeframe as per their policy’s terms and conditions. Importantly for customers, we don’t require any additional underwriting and the policy can be reinstated even if a valid claim has arisen.

Before we rolled out the additional flexibility, this would have meant customers that failed to pay their premiums and where their policy lapsed, they would have had 3 months from the first unpaid premium to pay all their outstanding premiums and reinstate their policy, keeping their valuable cover in place.

Additional flexibility - updated for Covid-19

In May, we announced that we were updating the Reinstatement Clause to allow policyholders additional flexibility.

When a customer comes to reinstate their policy, they now have two options – either to pay all outstanding premiums at once – or spread the payments out over the next 12 months. The customer can inform us of which option they are taking by filling out a simple form - this will be available over the next few days. This instruction can be taken from the customer or the Financial Broker.

If the original DD mandate was cancelled, then we’ll need a new mandate in place before the policy can be reinstated – we will include this mandate on the form.

Reinstating the policy

For policies that miss their first premium in November, December or January, we will continue to offer additional flexibility for our Reinstatement Clause.

This flexibility applies to customers with a guaranteed premium protection policy.*

• They will fill out and return a simple form to us within 3 months of their first unpaid premium, and we will reinstate their policy.

• The unpaid premiums can either be paid in a single lump-sum or else spread over the next 12 months.

• This applies to monthly contribution contracts only.

• The spreading of unpaid premiums can only be used once per policy.

It’s important to note that as per our policy conditions, a customer’s policy cannot be reinstated if Zurich Life receives a request from the customer to cancel their policy. This valuable option gives your clients the time and opportunity to reinstate their protection contracts.

*This includes Guaranteed Term Protection, Guaranteed Mortgage Protection, Guaranteed Whole of Life & Guaranteed Pension Term. It does not include any unit-linked products. For our additional flexibility, customer premiums must already be paid monthly.

The impact on commission

Any clawback of commission will also be deferred from when the policy lapses to the end of the three month reinstatement period. This means we are deferring all commission clawback for 3 months on all guaranteed protection products which lapse due to non-payment of premiums. The only time this wouldn't happen is if we received a specific instruction to cancel the policy – as outlined above.

For more information please contact your Zurich Service Team or your Broker Consultant.