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Lapsed Policy

A lapsed policy is an insurance contract that has ended because the required premium was not paid within the grace period. Once a policy lapses, coverage stops, and the insurer is no longer obligated to pay any benefits for claims incurred after the lapse date. A lapse can occur in any type of insurance - including health, dental, life, or disability - when the policyholder fails to make a payment by the due date and does not bring the account up to date before the grace period expires.

In most cases, the insurer provides written notice before cancellation, giving the policyholder an opportunity to reinstate coverage. Some policies can be reinstated within a specified time frame by paying the overdue premiums and, in some cases, providing updated health information. However, if the reinstatement period passes, the policyholder must apply for a new policy, which may require medical underwriting and could result in higher premiums or declined coverage.

Example:

If your monthly health insurance premium is due on June 1 and you fail to pay by the end of the 31-day grace period, your policy will lapse on July 2. Any medical expenses after that date will not be covered until the policy is reinstated or a new plan is issued.

What to Watch For:

Set up automatic payments or reminders to avoid missing premium due dates. Once a policy lapses, reinstating it can be costly or impossible if your health status has changed. Always contact your insurer immediately if you anticipate a delay in payment, as they may provide options to maintain your coverage.

Related Terms

Laser Eye Surgery Allowance

A laser eye surgery allowance is a vision care benefit included in some health insurance plans that provides reimbursement toward the cost of corrective laser procedures such as LASIK or PRK. These procedures permanently reshape the cornea to improve vision and reduce or eliminate the need for glasses or contact lenses. Because laser eye surgery is considered elective and not medically necessary, it is not covered by provincial health insurance plans, making this allowance a valuable feature in private coverage.

Licence

A licence in the context of insurance refers to the official authorization granted by a provincial or territorial regulatory body that allows an individual or company to sell, advise on, or administer insurance products. Licensing ensures that insurance professionals meet educational, ethical, and legal standards required to operate in their jurisdiction. It protects consumers by ensuring that only qualified and accountable individuals provide insurance advice and services.

Life Insurance

Life insurance is a financial protection product that provides a tax-free lump-sum payment, known as a death benefit, to designated beneficiaries when the insured person dies. It is designed to replace income, pay debts, cover final expenses, or provide financial stability for dependents and loved ones. Life insurance helps ensure that family members can maintain their quality of life and meet ongoing financial obligations even after the loss of the primary earner.

Life Insured

The life insured is the individual whose life is covered under a life insurance policy. If the life insured passes away, the insurer pays the death benefit to the designated beneficiary or to the policyholder, depending on the policy structure. The life insured may or may not be the same person as the policyholder. For example, a spouse, parent, or business partner may own a policy that insures another person’s life.

Lifestyle Drugs

Lifestyle drugs are prescription medications used to improve quality of life rather than to treat or manage life-threatening or medically necessary conditions. These drugs address personal or lifestyle-related concerns, such as sexual performance, hair growth, weight management, or cosmetic enhancement.

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