lapse


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Related to lapse: lapse rate

Lapse

The termination or failure of a right or privilege because of a neglect to exercise that right or to perform some duty within a time limit, or because a specified contingency did not occur. The expiration of coverage under an insurance policy because of the insured's failure to pay the premium.

The common-law principle that a gift in a will does not take effect but passes into the estate remaining after the payment of debts and particular gifts, if the beneficiary is alive when the will is executed but subsequently predeceases the testator.

In its broadest sense, the term lapse describes the loss of any right or privilege because of the passage of time or the occurrence or nonoccurrence of a certain event. It is often used by legislatures in reference to governmental concerns. Legislatures may include anti-lapse provisions in statutes to ensure that certain spending programs remain funded from year to year. Lapse also has distinct significance in the law of insurance contracts and wills.

An insurance policy can lapse, or become void, if the insured fails to make payments on it. All states give insureds a grace period, which allows extra time to make a payment owed under a policy. The grace period varies from policy to policy. For example, in Maine the grace period is seven days for Health Insurance policies with weekly premiums, ten days for such policies with monthly premiums, and thirty-one days for all other such policies (Me. Rev. Stat. Ann. tit. 24-A, § 2707). The grace period in Maine is thirty days for life insurance policies (§ 2505).

Some statutes on insurance policy lapses provide a small measure of protection against lapse. For example, Maine Revised Statutes Annotated, title 24-A, section 2739 (West 1995), states that no insurance company may cancel a health insurance policy within three months of nonpayment unless the insurer provides the insured with a notice of potential lapse within ten to forty-five days after the premium was due. Section 4751 provides that in the event of a strike by insurance agents, no life or noncancellable health, hospital expense, or hospital and surgical expense insurance policy may lapse owing to nonpayment within thirty days of the strike's inception. This law applies only if the agent is responsible for the collection of premiums and is represented in Collective Bargaining by a labor organization that has been recognized by the state.

A will is a document left by a deceased person, who is called a testator or devisor. A will allocates the property of a testator to living persons. If the intended recipient of a gift in a will (called a beneficiary or devisee) dies before the testator, the gift may lapse. This means that the gift is void and is placed back into the estate of the testator. The property becomes part of the residuum of the estate and may not be disposed of in the manner sought by the testator.

Almost all states have statutes that provide that in the event of a lapse, the gift should go to the issue, or lineal descendants, of the deceased devisee. If the beneficiary has no issue, then the gift is left in the estate of the testator.

In some states the anti-lapse statute applies only to grandparents of the testator and lineal descendants of the testator's grandparents. For example, under the Maine Revised Statutes Annotated, title 18-A, section 2-605 (West 1995), the issue of the deceased devisee may receive a gift intended for the deceased devisee, but only if they survived the testator by 120 hours.

lapse

1) v. to fail to occur, particularly a gift made in a will. 2) v. to become non-operative. 3) n. the termination of a gift made by will or for future distribution from a trust, caused by the death of the person to whom the gift was intended (the beneficiary, legatee, devisee) prior to the death of the person making the will or creating the trust (the testator, trustor or settlor). (See: will, trust, beneficiary, legatee, devisee)

lapse

the termination of some right, interest, or privilege, as by neglecting to exercise it or through failure of some contingency.

LAPSE, eccl. law. The transfer, by forfeiture, of a right or power to present or collate to a vacant benefice, from, a person vested with such right, to another, in consequence of some act of negligence of the former. Ayl. Parerg. 331.

References in periodicals archive ?
Our research differs from the existing literature on optimal policyholder behavior within VAs in that we not only describe optimal lapse rates and determine the fair guarantee fee, but also analyze and contrast the impact of various product features on lapse rates, fair fee, and the products' respective values to the policyholder.
President Donald Trump is expected to sign the reauthorization before the program lapses, though the reauthorization does not include any reforms to the program.
Offers to renew a policy can't be made during the lapse in authority.
If the loan closes after the lapse in authority but the date of coverage was before the lapse period, then payment from the insured is acceptable within 10 days.
The consequences of not having an unintentional lapse feature on a policy could potentially be further compounded by the following two features that are also not required on a chronic illness rider.
Akbar Marri could be known after lapse of four years.
As companies were trying to conserve as much of their term business at adequate margins as possible, policyowners can be expected to make the logical, if not obvious, decision to either let their policies lapse, convert to permanent insurance or continue on with the coverage for at least a limited time period.
The overall lapse rate was 4.5 per cent, with level term products having about twice the lapse rate of UL with secondary guarantee products.
Will's lapse inadvertently created an E&O coverage gap, and the current insurer is not liable for his past deeds.
Interest in lapse rate determinants has become more prominent in recent years as some financial service firms have applied securitization techniques to life insurance policies held by individuals.
Sports violations, research manipulation, gender discrimination, and other ethical lapses affect an entire institution as they have a spillover effect on its reputation (Cullen, Latessa, Byrne, & Holman, 1990; Gerdy, 2002).