The percentage of policies, in force at the beginning of the year, that lapse by non-renewal, surrender or cancellation during the year. Insurers who have to constantly replace lapsed policies have relatively high acquisition costs. Life companies use the ratio as an indicator of marketing performance. The converse is persistency.
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The ratio of the number of life insurance policies that lapsed within a given period to the number in force at the beginning of that period.

A policy lapses when it is not renewed for a further term. Revival of lapsed life policies may occur under a non-forfeiture clause.The lapses risk in life business means a lower level of recovery of fixed costs. Where up-front commission is paid it becomes more difficult to recover.