What does the term lapse refer to in an insurance context?

In an insurance context, the term "lapse" specifically refers to a policy being terminated due to non-payment of premiums. When a policyholder fails to make the required premium payments by the due date, the insurance company may let the policy lapse, resulting in the loss of coverage. This situation highlights the importance of maintaining timely payments to ensure ongoing protection through the insurance policy.

The other options represent different scenarios in the insurance realm but do not accurately define a lapse. For example, voluntary cancellation of a policy by the insured would not be classified as a lapse; rather, it is an active decision made by the policyholder. Similarly, a policy ceasing coverage on the expiration date is a natural conclusion of the policy term, not a lapse. Lastly, claim denial due to specific policy conditions refers to the circumstances under which a claim may be rejected, which is unrelated to the termination of a policy due to unpaid premiums.