A policy lapse notice is a formal written communication issued by an insurance company when required premiums have not been paid and a life insurance or annuity contract is at risk of terminating. The notice explains that the policy is in a grace period or pending lapse status due to nonpayment. It typically specifies the amount past due, the date by which payment must be received, and the consequences if no payment is made, including loss of coverage, loss of riders, or surrender of accumulated cash value. Many notices also outline options such as reinstatement requirements, using cash value or dividends to cover premiums, or electing a nonforfeiture option like reduced paid-up or extended term insurance. Properly drafted lapse notices help carriers satisfy regulatory requirements, reduce complaints, and give policyowners a final opportunity to preserve valuable protection for their families or businesses.

In everyday practice, a policy lapse notice is automatically generated by the carrier's policy service system when a premium has not been received by the end of the grace period. Advisors and case managers monitor these notices because they signal that a client's coverage is in jeopardy and immediate outreach is needed. Many agencies track lapse notices in internal dashboards or CRM workflows so staff can call the client, explain the situation, and review whether the policy still meets the client's goals. Lapse notices often trigger conversations about updating beneficiaries, adjusting death benefit, or moving to a more affordable product. Good documentation of when the notice was sent, when the client was contacted, and the client's ultimate decision helps protect the advisor and the insurer while demonstrating a proactive service culture.