What could happen if an insurance policy lapses?

When an insurance policy lapses, it means that the coverage has been terminated due to non-payment of premiums or failure to meet other policy requirements. This can lead to significant consequences for the policyholder. One of the primary risks associated with a lapsed policy is the potential loss of all benefits and coverage that the policy previously provided. Without an active policy, the individual is no longer protected against claims and risks that were covered, leaving them vulnerable to financial loss.

While it may be possible to reinstate a policy under certain conditions, automatic reinstatement is not guaranteed and often requires the payment of back premiums or meeting other criteria. Additionally, a lapse does not result in decreased premium rates, nor does it lead to the issuance of additional coverage from the insurance company. Therefore, the most accurate outcome of a policy lapse is that the policyholder may indeed lose all benefits and coverage.