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Glossary

Lapse

DEFINITION

In insurance, a lapse means the policy is automatically cancelled because the premium was not paid. If payment is not received within the grace period, coverage ends. For policies with cash value, that cash value may be used to pay premiums first, but the policy will still lapse once the cash value runs out.

ELI5

If you stop paying for insurance and do not pay in time, the policy can end by itself. That ending is called a lapse.

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