Glossary
Policy lapse
A policy lapse is the termination of a life insurance policy's cover because premiums have not been paid within the grace period allowed.
Policy lapse explained
If a policyholder stops paying premiums, the insurer usually allows a grace period, for example 30 days after the due date, during which cover continues. If payment is still not received, the policy lapses and the insurer is no longer obliged to pay a claim.
Many insurers allow a lapsed policy to be reinstated within a set period if the policyholder pays the arrears and, in some cases, provides evidence of continued good health. Policies with a savings element may instead be converted to paid-up status rather than lapsing outright. Exact rules vary by insurer and product.
Why it matters in life insurance
Lapses are a major cause of lost premium income and disappointed customers in Zambia, especially where payment channels are unreliable or reminders are not sent. Ontech LifeI ERP sends premium reminders by SMS and WhatsApp, tracks grace periods and manages reinstatement to reduce avoidable lapses.