What is meant by a policy lapse?

A policy lapse refers to a situation where the insurance policy is no longer in effect due to the failure of the insured to make the necessary premium payments. Insurance policies typically require regular premium payments to remain active, and when these payments are not made, the insurer may terminate the policy, resulting in a lapse in coverage. This means that the insured will no longer have protection under the policy and may not be able to file claims for any losses that occur after the lapse date.

In the context of the other options, increasing coverage limits, changing health providers, or expanding coverage without additional costs do not directly relate to the maintenance of the policy's active status through premium payments. Instead, these actions pertain to modifying the terms of the insurance coverage rather than the consequences of failing to maintain the financial obligation associated with the policy. Thus, the correct interpretation of a policy lapse is tightly linked to premium payment failure.