lapse
Also called: polis lapse, polis batal
An inactive policy status because the premium was not paid within the grace period.
What it means
Lapse is the condition of a policy that is cancelled or inactive because the premium was not paid past the grace period, or for other reasons according to the policy. When lapse occurs, protection stops and the policyholder is no longer entitled to benefits. A lapsed policy may be reinstated under certain terms, for example by paying arrears and undergoing renewed terms.
Why it matters for families
Lapse makes the family lose protection right when the risk is still ongoing. If the policy has a cash value, lapse can also affect the benefits already accumulated. Families need to monitor premium payments so lapse does not happen unnoticed, especially on long-term policies.
Example
For example, a policy is not paid for several months until it passes the grace period. Its status becomes lapse and claims cannot be filed. To reactivate it, the family must follow the insurer's reinstatement procedure, which may require a new medical check-up.
Common misunderstanding
Many think a lapsed policy automatically refunds all premiums already paid. The correction: refunds depend on the type of policy and its terms, and often the premium is not returned.