What Does It Mean For An Insurance Policy To Lapse. The most common reason for a lapsed policy is because of a missed payment or a series of missed. A lapse in coverage is any period of time that your registered car is not covered by car insurance.
Simply put, a lapse occurs when premium payments on a life insurance policy are missed and, depending on the type of insurance, the cash value is exhausted. When a life insurance policy “lapses,” it means that the policyholder or designated payor has not paid one or more required premium payments. Policy lapsation or a lapsed policy means that life cover and benefits payable under the policy have stopped or are reduced.