What happens when a life insurance policy lapses due to non-payment of premium?

When a life insurance policy lapses due to non-payment of premiums, the policyholder loses the benefit of the policy. This means that the insurance coverage ceases to be in effect, and the policyholder is no longer entitled to any benefits or payouts that the policy previously offered. Lapsing occurs when the policyholder fails to make the necessary premium payments by the end of the grace period given by the insurance company.

It is important for policyholders to understand that if their policy lapses, they will not be eligible to receive death benefits or any other benefits that may have been included in the policy. In many cases, the insured amount will be forfeited unless the policyholder takes action to reinstate the policy within the insurer's guidelines.

The other choices present scenarios that are not aligned with the outcome of a policy lapse. For instance, automatic renewal or indefinite coverage would imply continued protection, which is not the case when premiums are unpaid. Additionally, the insurer does not take over the premiums; rather, the responsibility to pay premiums remains entirely with the policyholder.