Final answer:
During a mental status exam, if a clinician notes that a client 'lacks insight', it means that the client fails to understand their current distress.
Step-by-step explanation:
The term 'lacks insight' in a mental status exam refers to a client's inability to understand their current distress. It means that the client fails to comprehend the severity or significance of their situation or condition. For example, a client with depression may not fully comprehend the impact their symptoms have on their daily functioning or the need for treatment. This lack of insight can hinder their ability to seek help or comply with treatment recommendations.