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Insurance Lapse
Insurance Lapse is referred to a period of time after your insurance premium is due when your policy is liable to be cancelled or terminated for failure to pay the premiums or sometimes for some other reasons (for example, in case you have lost your cash value under Life Insurance contracts which allow to build up cash value). The period, after which your insurance lapses, varies by state and by the type of an insurance contract.
Insurance lapse is a term widely used in reference to different types of insurance contracts such as Life insurance, Health insurance, Auto Insurance, Insurance through the Employer and Homeowners Insurance.
Usually a lapse in your insurance is fraught with penalties you will be imposed on. The penalty is determined in accordance with the regulations of the state you reside in, the type of insurance you have, your insurance provider, and in case of Auto Insurance, it also depends on where you have your car registered.
In some cases you may have a special lapsed insurance policy which gives you an opportunity to reinstate your policy by paying back all the premiums due within a set period of time. It is a soothing cushion made up by insurers to let their clients maintain the coverage.
Yet, generally, if you let your policy lapse, it is a very serious argument for the insurance company to stop your coverage to deny the renewal of your policy or to refuse to renegotiate the insurance contract. Besides, a lapse in your coverage may mean that you may not be eligible to receive benefits under a different type of a contract and will have to sustain a waiting period (usually for 12 months) for pre-existing conditions.
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