Define 'lapse' in the context of a life insurance policy.

The term 'lapse' in the context of a life insurance policy refers specifically to the termination of coverage due to non-payment of premiums. When a policyholder fails to pay their premiums within the grace period allowed by the insurance company, the policy may lapse, meaning that the life insurance coverage is no longer in effect. This can lead to the loss of benefits, and the insured individual will no longer have the financial protection originally intended by the policy.

Understanding why a policy lapses is crucial for both policyholders and underwriting professionals, as it highlights the importance of maintaining premium payments to keep the coverage active. It's essential for policyholders to be aware of payment schedules and any potential grace periods offered by their insurance providers to avoid unintended lapses in coverage.