Why do some customers let their policy lapse?
Updated: Nov 15, 2022
It may seem baffling why customers who have already spent hard earned money to invest in life insurance, sometimes let their policies lapse. In the course of the thousands of calls done by the Qualyon Voice conversation system, and by doing customer interviews, we have some observations we are able to share. If you know of others, please do tell!
An Indifferent Customer
Customers who have been paying for their insurance coverage for years often forget about their policy until they need to make a claim. Customers may not realize that if they don't pay their premium, they won't be covered under their policy. Sometimes, they may think that they have "paid enough", and that they should be entitled to some payouts. They may think that they don't need to renew their policy because they haven't had any claims. However, policies often require renewal even if no claims were filed.
Policy sourced as tax benefit tools for life and health not the importance. As a memorable slogan by Life Insurance Corporation says, "Jindegi ke sath aur jindegi ke baad bhi" (with you throughout life, and after life too)
Lack of Proper Customer Support
Customers do often call the insurer, and end up not getting proper support. If they find that their policy is lapsing, they may panic and try to call their agent right away. But many agents aren't open on weekends, and they may not answer the phone at all during those times.
Sometimes, customers don't know what to expect when they call their agent's office. Many agents' offices don't have customer service representatives on duty 24/7, and they may have trouble getting hold of someone. When customers call their agent's office, they may get disconnected after waiting on hold for a long time. Or they may wait for hours to speak to an agent. Customers may call their agent's office only to find out that the person who answered the phone didn't know anything about their policy.
A lack of connect can also simply be a result of an ever mobile lifestyle. People are moving more often between locations, between jobs. There may be family changes to accommodate. Endless re-submission of documents and long bureaucratic hassles may result in customer simply giving up on you. You don't give up on your customers so fast! Scale your infrastructure with technologies such as a voicebot, and support your customers through this transition.
Poor Outbound Support
Customers may also feel overwhelmed when they get calls from collections agencies. Collections agencies sometimes send letters asking customers to contact them back about their account. These letters can scare people, especially if they've never heard of a collection agency before.
Customer is Fearful of High Spend
Customers may not understand how much money they owe their agent. Because of this, they may not understand why they're being asked to pay for something they already paid for. They may think that their agent doesn't care about them, and they might decide to cancel their policy. Customers may think that calling their agent's office is going to cost them a lot of money. In fact, it costs less very little per month to keep their policy active.
Customer giving up on you? Don't you give up on them!!
Suggestions
Do you have policies that are in early or deep lapse?
Call your policyholders and ask them if they want their policy reinstated. If they say yes, then send out a letter to them explaining what happened and how to reinstate.
Send out a reminder email to your current policyholders.
Create a shortlist of people who may be interested in reinstating their lapsed policy.
Contact these people via phone and explain what happened and how to re-instate.
Follow up with the person who reinstates their policy.
Most importantly, nurturing a customer from policy creation to payout is incredibly important. By checking between renewals how they are doing, you build trust, and that goes a long way in retaining customers
Creating the urgency in customers so they will quickly revive their policies is incredibly important for them. Insurance companies must put in the effort to provide great service to their customers. If done right, perhaps the policies will not lapse to being with. But if it does, no effort should be spared to help customer revive their policies