What does "lapse" mean in the context of life insurance?

In the context of life insurance, "lapse" specifically refers to a situation where a policy becomes invalid due to non-payment of premiums. This occurs when the policyholder fails to pay the required premiums within a specified grace period. Once the grace period expires without payment, the insurance policy lapses and the coverage is no longer in effect. It's an important concept because it underscores the need for policyholders to stay current on their premium payments to maintain their insurance coverage.

Other options present different aspects of insurance policies but do not capture the meaning of "lapse." Renewing a policy before it expires and cancelling a policy voluntarily are both actions that keep the policy active in some manner, while the reinstatement of a policy after payment indicates a return to coverage status rather than a lapse in it.