What is a major consequence of failing to pay an insurance premium?

Failing to pay an insurance premium leads to a lapse of the insurance policy. When premiums are not paid on time, the insurer typically has a grace period during which coverage remains in effect, but if payment is not made by the end of that period, the policy is terminated. This lapse means that the insured will no longer have coverage for claims that may arise after the policy has expired. This is a significant consequence as it leaves the individual unprotected and could result in financial loss in the event of an accident or disaster.

The lapse of coverage can also complicate matters in the future when the individual seeks to reinstate the policy or purchase a new one, as insurers may view a history of missed payments as a risk factor. This underscores the importance of making premium payments timely to maintain continuous coverage.