Chargeback Shield — Know Your Carrier Risk Before You Write
Chargeback exposure is the #1 hidden cost in life insurance sales. Understand lapse rates, carrier risk profiles, and how to protect your income.
How Chargebacks Work
When a policy lapses within the chargeback window (typically 9–12 months), the carrier claws back the commission paid. If you received an advance, you owe the balance immediately. If you were paid as earned, future commissions are offset until the balance is recovered.
The effective chargeback rate varies dramatically by product and market segment. Final expense policies — sold to the 65+ market — have the highest lapse rates in the industry, commonly 15–25% in the first year. Term and IUL policies in the working-age market run 8–12%.
Carrier Risk by Product Type
| Product | Avg 1st-Year Lapse Rate | Chargeback Window | Risk Level |
|---|---|---|---|
| Final Expense | 15 – 25% | 9 – 12 months | High |
| Term Life | 8 – 12% | 12 months | Medium |
| IUL | 6 – 10% | 12 – 24 months | Medium |
| Whole Life | 5 – 8% | 12 months | Lower |
| Medicare Supplement | 10 – 18% | Annual renewal | Medium |
Run the Deal Analyzer
Factor your estimated chargeback rate into any offer before you sign. See your real net income.