Business News
The Goldmine of Lapsed Policies
Reconnecting for New Life Insurance Sales, NOT Conservation
Written by: Paul Bloodsworth
August 27, 2024
[5 minute read]
Summary
Lapsed life insurance policyholders may seem like missed opportunities, but what if they’re actually your best leads waiting to be rediscovered?
These former clients already know the value of coverage, and with the right approach, you can reignite their interest. Curious how?
Dive into the overlooked potential of this group and learn why reconnecting with them could be the key to unlocking your next wave of sales success.
Oh yea... we are NOT talking about a conservation effort!! We're WAY past that. (Years-old ex-clients)
In this article, we will highlight 7 major reasons why ex-clients make for your best prospects to write new life insurance business.
"If I had six hours to chop down a tree, I'd spend the first four hours sharpening the axe."
Abraham Lincoln
Why Lapsed Life Insurance Policyholders Are Your Best Prospects
1. They Understand the Importance of Life Insurance
Lapsed policyholders already recognize the value of life insurance. At some point, they made the decision to purchase a policy, indicating that they understand its significance in protecting their loved ones and securing their financial future.
Unlike new leads who may need to be educated about the basics of life insurance, lapsed policyholders don’t require a lot of convincing about why life insurance matters. This shared understanding forms a strong foundation for re-engaging them.
2. Life Circumstances May Have Changed
Life is dynamic, and so are people’s financial and personal situations. The reasons why a policyholder let their life insurance lapse could range from financial constraints to a change in priorities. However, their circumstances may have changed since then.
They might now be in a better financial position, or they might have experienced significant life events, or hiccups (as we like to call them)—like marriage, having children, or buying a home—that reignite the need for life insurance. By reaching out to them, you can address their current situation and offer a policy that fits their needs today.
3. They Are Easier to Reconnect With
Lapsed policyholders are generally easier to reconnect with because you already have their contact information and a history of engagement. However, it’s important to consider that, according to the American Movers Association, 20% of people statistically move every year. This mobility can make reconnecting more challenging, as people may change addresses, phone numbers, or even email accounts. (Good thing we have a Private Investigator onboard Excel Media Company to teach agents how to reconnect.)
Despite this, the existing relationship you’ve built still gives you an edge. You can use this prior connection to tailor your outreach efforts more effectively, perhaps by leveraging multiple communication channels or updating contact information through follow-up strategies. When you do successfully reach them, they are more likely to respond positively because they’re already familiar with you or your agency.
4. They May Have Regrets About Lapsing
Many lapsed policyholders experience regret after allowing their policies to lapse. They may worry about the security of their loved ones or feel a sense of unease about not having coverage. This regret can be a powerful motivator.
When you approach them with an offer to readdress their coverage needs and start a new policy, you’re not just selling insurance—you’re offering them peace of mind and a second chance to protect what matters most.
5. They Aren't Contacted After Lapse
Let's face it. Agents prefer high-probability leads to call. Once conservation efforts fails to reinstate a lapsed policy, that client gets avoided like a disease. It's a red flag to agents who do not want this client repeating the lapse.
Furthermore, lapsed policyholders do not take initiative to re-engage with their agent. It's awkward. Give it time.....
Studies show that 96% of ex-clients never again make contact with a life insurance agent.
6. They Offer Referral Opportunities
Lapsed policyholders, once re-engaged, can become excellent sources of referrals. Having gone through the process of purchasing life insurance before, they understand its importance and may know others in similar situations.
If they have a positive experience with your agency upon returning, they are likely to refer friends, family, or colleagues who could benefit from your services. This ripple effect can lead to a steady stream of high-quality leads.
7. They Represent a Cost-Effective Lead Source
