What happens if a life insurance policy lapses?

When a life insurance policy lapses, it means that the policyholder has failed to make the required premium payments, resulting in the cancellation of coverage. As a result, the coverage is no longer in effect, and the policyholder loses the benefits associated with the policy. This includes any potential death benefits that would have been payable upon the insured's death. Depending on the specific terms of the policy, the policyholder may not have a reinstatement option available, which means they cannot simply restore the policy without going through the application process again or making up missed payments.

It's also important to note that some policies might allow for a grace period during which the policyholder can make the payment and avoid lapsing. However, if the policy goes beyond that grace period without payment, it typically leads to the loss of coverage and benefits. Understanding the implications of policy lapses is crucial for maintaining life insurance coverage and ensuring that beneficiaries will receive the intended financial support.