What can cause a life insurance policy to lapse?

A life insurance policy can lapse when premiums are not paid after the grace period has elapsed. Life insurance policies typically come with a grace period, which is a specified amount of time after a premium is due during which the policy remains in force even though the premium has not yet been paid. If the insured does not make the payment by the end of this grace period, the policy will lapse, meaning that coverage is lost and the insurer is no longer obligated to pay any claims.

This is a critical concept for policyholders to understand, as failing to keep up with premium payments is one of the primary reasons policies become inactive. Options related to consistent premium payments suggest a situation that maintains the policy's active status, while accidental overdrafts or making too many changes to the policy could lead to complications but do not directly result in a lapse in coverage like the failure to pay premiums does.