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.
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.
Example:
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.
What to Watch For:
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.
