Okuzeka
Insurance vocabulary · Policies & Contracts

Lapse

Meaning in insurance, with examples

/læps/verbCommon term

In insurance, lapse means: To stop being valid because the premium was not paid or the policy was not renewed in time.

In Turkish: hükümsüz kalmak, sona ermek, geçersiz hale gelmek

How it is used

Used mainly in life and health insurance. A policy lapses, and insurers track the lapse rate to see how many customers stop paying. A lapsed policy can sometimes be reinstated. Also used as a noun: 'policy lapse'.

Example sentences

  1. His life policy lapsed after he missed three monthly payments.

  2. Lapse rates usually rise when household budgets are under pressure.

Common collocations

  • let a policy lapse
  • lapse rate
  • lapsed policy
  • reinstate a lapsed policy
  • grace periodExtra time after a premium is due during which the customer can still pay and the policy stays in force.
  • cancellationEnding an insurance policy before its expiry date, either by the customer or by the insurance company.
  • renewalThe continuation of a policy for another period, usually a year, often with an updated premium and conditions.
  • surrender valueThe amount of money a policyholder receives if they cancel a savings-type life policy before it ends.

More terms: Policies & Contracts

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This page explains English vocabulary for learners. It is not financial advice.