What must an insurer do if a life insurance policy lapses due to non-payment?

When a life insurance policy lapses due to non-payment, the insurer is required to send a notice within a specific timeframe, which is generally within 30 days of the lapse. This requirement is in place to ensure that policyholders are informed about the status of their insurance coverage and are given an opportunity to remedy the situation, such as making a payment to reinstate the policy.

This notice serves an important purpose: it helps maintain transparency and ensures that the insured is aware of the potential loss of coverage. It can also prompt the policyholder to take immediate corrective action to avoid any gaps in insurance protection. The requirement to send a notice is consistent with consumer protection laws, which aim to safeguard the interests of policyholders.

In contrast, automatic reinstatement of the policy, cancellation without notification, or refunding paid premiums are not standard practices required by law in the event of a lapse due to non-payment. These options do not align with the regulatory framework that emphasizes the importance of keeping the policyholder informed.