In this guide 6 sections
Policies lapse when a premium goes unpaid past the grace period. Spot them early by flagging three signals on the client record. These are a due date inside the grace window, a returned auto-debit and a premium missed in the previous cycle. Then call the client before cover ends.
What a lapse looks like on your side
The client rarely announces a lapse. A premium falls due, a debit bounces or a reminder is ignored, and weeks later the insurer’s notice arrives, by which time the grace period may be gone.
Advisers often learn about it at claim time. That is the worst possible moment, because the family is grieving and the policy is no longer in force.
The fix is a list sorted by days remaining.
The three signals worth flagging
First, a due date inside the grace window. Take each policy’s premium due date and mode and add the insurer’s grace days. Anything whose grace period ends within two weeks goes on the list.
Second, a returned auto-debit or a mandate failure. The bank return gives a reason such as low balance, closed account or expired mandate, and each reason points to a different conversation.
Third, a missed premium last cycle. A client who paid late once may do so again, so mark the payment history on the record and not just today’s status.
- Days left before grace period ends
- Bank return reason on the last debit
- Premium paid late in the last two cycles
- Mode: monthly, quarterly, half-yearly or yearly
- Policy age, since early-year policies lapse more painfully
Build the at-risk list each week
Pull the list every Monday. Sort by days remaining, then by sum assured. A term cover with a rider and three days left comes first.
Assign each row to a person and a call date. Log the call outcome the same day, whether the client was reached, promised payment, could not be reached or wants to surrender the policy.
In a spreadsheet, colour rows by days left. If it lives on a client record, filter by status and let the due dates sort themselves into a call queue.
What to say on the call
Keep it short. State the policy, the amount and the last date. Then ask whether the balance was the problem, and offer to help set up a fresh mandate or send a payment link.
Do not lecture. Most clients simply forgot, changed salary accounts or let a cheque book run out, so treat the call as a favour and never as a collection call.
If the client wants to stop, ask why. Cash pressure may call for a change of premium mode, a paid-up option or a surrender value quote. Note the answer for the next review.
- Policy number and last payment date
- Amount due and final date
- Reason stated by the client
- Option offered: new mandate, payment link or mode change
- Follow-up date
Close the loop after the call
A promised payment is not a paid premium. Check the insurer’s status two days after the date you were given, and mark the row cleared only when the receipt shows.
Review lapsed policies monthly. Some insurers allow revival within a set window, which often needs a health declaration, income proof and the unpaid premiums with interest, so start that paperwork early.
Each quarter, count the policies you saved and the ones that slipped past grace. Then use that gap to decide how many days ahead the list should look.
Lapse watch list
A one-page weekly list. Columns: client, policy number, insurer, premium amount, due date, grace end date, days left, last debit result, call owner, call outcome and cleared date. A top strip shows the week’s count of policies inside grace, returned debits and calls made, so a manager can read the week in ten seconds. A bottom block lists revivals in progress.
Open a blank worksheet to printQuestions owners ask
What is the grace period on a life insurance policy?
It is a short window after the due date when the policy stays in force while the premium can still be paid. Its length varies by insurer and premium mode. Read each policy document.
How early should I call a client about a premium?
Two weeks before the grace period ends is a workable line. A bounced auto-debit deserves a call the same week.
Can a lapsed policy be revived?
Often, within a window set by the insurer, usually with a revival form and sometimes with fresh health or income papers. Check the insurer’s rules and start early.
Do I need software to track lapse risk?
Small books run fine on a spreadsheet. Once the count passes a few hundred policies, a record that sorts by days left and sets call tasks saves missed calls.