Under which circumstance can a life insurance policy lapse?

A life insurance policy can lapse primarily due to non-payment of premium. When a policyholder fails to pay the required premiums on time, the insurance company may terminate the policy after a grace period. During this grace period, the policyholder has the opportunity to make the overdue payment without any loss of coverage. However, if the payment is not made, the policy will lapse, meaning that the coverage provided by the insurance is no longer in effect.

The other options do not lead to a policy lapse. Changing the beneficiary, for instance, simply reallocates the future death benefit but does not affect the status of the policy itself. Similarly, changing one’s residence or switching from term to whole life insurance are also administrative tasks that do not cause a policy to lapse. Instead, switching from term to whole life typically involves converting the policy without affecting its continuity. Therefore, non-payment of premium is the sole circumstance that directly leads to the lapse of a life insurance policy.