When an insurance policy terminates due to non-payment of premiums. In Australia, policies typically lapse after a 30-day grace period following missed payment. A lapsed policy means coverage ends, and you'll need to reapply with full underwriting to obtain new insurance.
Lapse is the termination of an insurance policy due to non-payment of premiums. When you miss a payment, Australian insurers typically provide a 30-day grace period during which cover continues and you can pay to avoid lapse. After the grace period expires, all cover ceases immediately.
If you reapply later, any health conditions that have developed since the original policy started will be assessed in fresh underwriting. This can result in higher premiums, new exclusions, or a decline.
If premium payments become difficult, contact your insurer before the grace period ends. Common options:
APRA requires insurers to operate fair lapse procedures and offer reinstatement options within defined timeframes.
Super-owned policies can lapse if the fund balance is insufficient to cover premiums. This is most common with:
Members may not notice for months unless they check statements.
Reapplying in your 50s or 60s, or after a health deterioration, may produce dramatically higher premiums or an uninsurable result. Maintaining premium payments (or formally cancelling unwanted cover) is the simpler path.
A policyholder's direct debit fails due to a closed bank account. They receive a lapse warning notice but miss the 30-day grace period while traveling overseas. Their policy lapses, and reapplying 6 months later after a heart condition diagnosis results in full coverage exclusion for cardiac events
During financial hardship, an insured person contacts their provider before lapse occurs and arranges a premium reduction by decreasing sum insured from $750,000 to $500,000, avoiding complete lapse while reducing premiums from $180 to $125/month
A superannuation-held insurance policy lapses when the member's account balance falls below the premium amount during market downturns, leaving them unknowingly uninsured until they check their statements 18 months later
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