Monthly premium draft is an automatic payment arrangement in which life insurance premiums are withdrawn from a policyowner bank account on a monthly basis. Instead of mailing checks or paying annually, the client authorizes the insurer to initiate electronic funds transfers (EFT) or automated clearing house (ACH) debits. Monthly drafting can make coverage more affordable by spreading payments throughout the year and reducing the risk of missed payments or lapses. Carriers may apply modal factors to adjust premiums for monthly mode compared to annual, semiannual, or quarterly billing. The authorization typically specifies the withdrawal date, account details, and conditions for changing or revoking the draft. Secure handling of bank information and clear communication about draft timing are crucial for maintaining client trust.

In day-to-day operations, monthly premium draft is one of the most common billing methods. Agents often recommend it for clients who prefer budgeting with smaller, regular payments or who want to minimize the chance of forgetting a bill. Application and e-delivery platforms usually include fields to set up the initial draft date and bank account routing information. When drafts fail due to insufficient funds or closed accounts, carriers send lapse notices or grace period letters, and agencies may help clients update payment details to keep coverage active. During policy reviews, advisors confirm that monthly drafts are occurring as expected and that the bank information is current, especially after clients change banks or consolidate accounts. Properly managed monthly premium draft arrangements support persistency and reduce administrative work for both carriers and distributors.