Lapse

A lapse in the context of insurance refers to the termination of a policy due to the policyholder’s failure to pay the required premiums within the designated grace period. When a policy lapses, the insurance coverage ceases to be in effect, and the insurer is no longer obligated to pay any claims that may arise subsequent to the lapse date. In some cases, a lapsed policy can be reinstated if the policyholder fulfills certain conditions set forth by the insurer, which typically include payment of overdue premiums and possibly providing evidence of insurability. However, if a policy is not reinstated and remains lapsed, the policyholder loses the benefits and protections that were originally provided under the terms of the insurance contract.