Automatic bank draft is an electronic payment arrangement in which life insurance or annuity premiums are automatically withdrawn from a clientTMs checking or savings account on scheduled dates. Also known as EFT or ACH draft, this method reduces the risk of missed payments, lapses, and billing delays, and it improves persistency for carriers and distributors. Clients authorize the draft by completing a bank draft form or e'consent and providing routing and account numbers. Automatic bank drafts can be set for monthly, quarterly, semiannual, or annual modes and are commonly used for flexible'premium products such as universal life or for modal premiums on term coverage.

Advisors encourage automatic bank draft to simplify premium management and reduce the administrative burden on clients. During applications or policy delivery, they collect voided checks or bank information and explain when the first draft will occur. CarriersTM policy service departments handle changes to bank information, payment dates, or premium amounts, often through online portals. When drafts fail due to insufficient funds or account changes, notices are sent and coverage may move into grace. Advisors monitor drafts for large cases or premium financing structures to ensure payments are being made as planned. Understanding automatic bank drafts helps advisors present a friction'free payment experience while protecting in'force business from avoidable lapses.