In life insurance plans you have to pay the premiums on the due date to continue coverage. If the premiums are not paid within the due date, an additional time period is allowed for the payment of the due premium. This period is called the grace period during which the coverage of the policy continues. However, if the premium is not paid even within the grace period, the policy lapses and the coverage come to a stop. Thus, policy lapse means stoppage of the insurance cover offered by the life insurance policy due to non-payment of due premiums.