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A life insurance policy lapse means that life insurance policy coverage is inactive hereafter. No policy changes can be made nor no death claim payments will be made if the policy lapses. To avoid lapses, always make the premium payments on time to your life insurance company. When a life insurance policy lapses, the policy is no longer active because of the missed premium payments.

Reasons for a Policy to Lapse - Policy lapses can happen for two common reasons:

Missed Premium Payments

First when you miss out on the premiums. Usually for the defaulted premiums the bank will provide a grace period for the customers to resume making payments but even after that if they continue to default then the policy will definitely lapse, meaning that it will no longer provide coverage to the policyholder.

You have utilised the entire cash value of the Plan 

A policy is considered lapsed when you withdraw the entire cash value of the policy. This is mostly applicable for a permanent life insurance policy. When you withdraw the entire cash value of the plan, it no longer is applicable and is considered to be closed or lapsed.

Tips to Avoid Policy Lapses

Pay attention to the reminders (emails, SMS, etc.) the insurer sends you as it contains important information regarding premium payment dues. The policy will not lapse without a notice. Even if your policy is lapsed you can always check with your insurer if it’s possible to reinstate it by paying a late penalty along with the pending premiums.

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