Lapsed Policy

A lapsed policy is an insurance contract that has ended because the required premium was not paid within the grace period. Once a policy lapses, coverage stops, and the insurer is no longer obligated to pay any benefits for claims incurred after the lapse date. A lapse can occur in any type of insurance - including health, dental, life, or disability - when the policyholder fails to make a payment by the due date and does not bring the account up to date before the grace period expires.

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In most cases, the insurer provides written notice before cancellation, giving the policyholder an opportunity to reinstate coverage. Some policies can be reinstated within a specified time frame by paying the overdue premiums and, in some cases, providing updated health information. However, if the reinstatement period passes, the policyholder must apply for a new policy, which may require medical underwriting and could result in higher premiums or declined coverage.

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Example:

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If your monthly health insurance premium is due on June 1 and you fail to pay by the end of the 31-day grace period, your policy will lapse on July 2. Any medical expenses after that date will not be covered until the policy is reinstated or a new plan is issued.

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What to Watch For:

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Set up automatic payments or reminders to avoid missing premium due dates. Once a policy lapses, reinstating it can be costly or impossible if your health status has changed. Always contact your insurer immediately if you anticipate a delay in payment, as they may provide options to maintain your coverage.