Hello Paul,
The only thing that happens is that the folders are not monitored thereafter – the files remain secured, and you can still open them and update them (although the updated files will use AES-128 instead of AES-256).
So, when you premium expires, the files in the secured folders will stay secured, but if you add new files to the folders you’ll have to manually instruct AxCrypt to encrypt them.
We will never lock you out of your information when your Premium expires, and we’ll never change the level of security for files encrypted – unless of course you modify and re-encrypt them as explained above.