Define "lapse" in the context of an insurance policy.

In the context of an insurance policy, "lapse" refers to the termination of the policy that occurs when the policyholder fails to pay the required premiums. If payments are not made by the due date, the insurer typically allows a grace period for the policyholder to make the payment without losing coverage. However, if the premium remains unpaid after this period, the policy is considered to have lapsed, meaning that all benefits under that policy are lost and the coverage is no longer in effect.

Understanding the implications of a lapse is crucial for policyholders since they could face financial consequences if they attempt to make a claim when the policy is no longer active. This concept emphasizes the importance of maintaining consistent premium payments to ensure continuous coverage.

Other choices reflect different aspects of insurance policy management but do not define "lapse." Renewing a policy, adjusting benefits, or increasing coverage amounts pertain to the ongoing management and enhancement of insurance policies but do not relate to the cessation of coverage due to non-payment.