What does an "insurance policy lapse" indicate?

An "insurance policy lapse" indicates that the policy has been canceled due to non-payment of premiums. When a policyholder fails to make the required premium payments by the due date, the insurance company may eventually terminate the policy because it's no longer in force. This situation typically arises after a grace period has passed without payment, meaning that the policyholder has lost coverage and any associated benefits.

Understanding the implications of a policy lapse is crucial for both consumers and professionals in the insurance field. It reinforces the importance of maintaining timely premium payments to ensure that coverage remains active and protects against potential risks. In this context, the other options do not accurately represent what a lapse means as they suggest scenarios where the policy remains active or is undergoing changes rather than being terminated entirely due to non-payment.