78 Out of 100 Quit Before 5 Years — Will You?

Cheat Sheet

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78 out of 100 Bharti AXA policyholders quit before completing 5 years (FY 2025). At the other end, ICICI Prudential retains 59 out of 100. The insurer you choose determines whether you’ll stay.

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The steepest drop happens between year 1 and year 2. Industry-wide, roughly 20-30% of policyholders don’t renew after the first year. By year 5, half are gone.

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Persistency is the clearest product-fit indicator. If you buy the right policy at the right price, you keep paying. Mass dropouts signal mis-selling, unaffordable premiums, or products people didn’t understand.

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LIC’s 61st-month persistency is 50.3% (FY 2025). That means half of LIC policyholders quit within 5 years. Private insurer averages are similar, but the range is wider (22% to 59%).

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Insurers with the best persistency (ICICI Prudential 58.8%, Canara HSBC 57.1%, Tata AIA 56.7%) tend to also have lower grievance rates and better ombudsman outcomes.

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All data from IRDAI Annual Report 2024-25, Persistency of Life Insurance Policies.

22.2%

Worst 5-Year Survival

Bharti AXA, FY 2025

▼78 out of 100 quit

58.8%

Best 5-Year Survival

ICICI Prudential, FY 2025

▲59 out of 100 stay

50.3%

LIC 5-Year Survival

FY 2025

—Half of all LIC policyholders

You buy a life insurance policy planning to keep it for 20, 30, maybe 40 years. But IRDAI data shows that most people don’t make it past 5. The persistency curve, which tracks what percentage of policyholders are still paying at each anniversary, reveals how quickly people drop off. And the shape of that curve varies wildly depending on which insurer you buy from.

The full decay curve: month 13 to month 61

IRDAI tracks persistency at five checkpoints: 13th month (1 year), 25th month (2 years), 37th month (3 years), 49th month (4 years), and 61st month (5 years). Each number tells you what percentage of policies sold in a given year are still active at that point.

Persistency decay curve by insurer, FY 2025 (%)

Insurer ⇅	Month 13 ⇅	Month 25 ⇅	Month 37 ⇅	Month 49 ⇅	Month 61 ⇅
Tata AIA	83.2	76.7	71.9	67.1	56.7
Max Life	83.0	75.0	68.0	60.0	52.0
HDFC Life	81.2	70.6	67.7	61.1	52.4
Canara HSBC	81.7	71.4	67.5	60.0	57.1
ICICI Prudential	80.4	73.2	67.6	62.1	58.8

IRDAI Annual Report 2024-25.

Read this table row by row and watch the numbers fall. Tata AIA starts at 83.2% and drops to 56.7% over 5 years, losing about 5 percentage points per year. That’s a gradual, predictable decline. Bharti AXA starts at 67.4% and drops to 22.2%, losing 9 percentage points per year on average, with the steepest drop between months 49 and 61.

What this means for you

A 61st-month persistency above 55% means the insurer’s policyholders generally find value in staying. Below 40%, something is structurally wrong with how the product is sold or priced. When you compare plans, check this number alongside the premium quote. The cheapest plan is worthless if half the buyers quit within years.

Where the biggest drop happens

For most insurers, the sharpest decline is between month 13 and month 25. That’s the transition from first-year payment to second-year renewal. If you were talked into a policy you didn’t fully understand, this is when you realise it.

IRDAI Annual Report 2024-25.

Shriram Life loses 23.8 percentage points in that first gap alone. Nearly 1 in 4 of their first-year policyholders don’t renew. Shriram’s distribution is concentrated in rural and microfinance channels, where policies are often bundled with loans. Once the loan obligation is met, the insurance payment stops. That’s not a customer choosing insurance; that’s a customer choosing a loan.

LIC’s unusual curve

LIC shows a pattern different from every private insurer. Its 13th-month persistency (64.1%) is lower than most private insurers. But its month-61 figure (50.3%) is actually higher than what you’d expect from such a weak start. The decay is slow and steady: 64 → 59 → 53 → 49 → 50.

The slight uptick from month 49 (48.8%) to month 61 (50.3%) is unusual. Persistency technically shouldn’t increase. This likely reflects data methodology differences in how LIC’s large paid-up and reduced paid-up policy portfolio is counted at the 61st-month mark.

LIC’s low start, slow decay

64.1% → 50.3%

LIC starts with 64.1% at month 13 (lower than HDFC Life’s 81.2% or Tata AIA’s 83.2%) but retains 50.3% at month 61. The 13.8 percentage-point total drop over 5 years is the smallest of any insurer. Private insurers start higher but fall further.

Slowest decay in industry

IRDAI Annual Report 2024-25.

What this means for you

LIC’s low starting point reflects its agent-driven model in rural and semi-urban areas, where some policies are sold to people who can’t sustain the premiums. But the people who do stay tend to be committed. LIC’s steady curve means if you’re comfortable with the product and can afford year 1, you’re likely to stay. Private insurers start with better-qualified buyers (higher incomes, online research) but still lose them at a faster rate.

What persistency actually tells you

High persistency doesn’t mean the insurer is “good.” It means the people who bought from that insurer found value in continuing. That’s a proxy for several things:

Right product sold to the right person: If a term plan matches your need and budget, you keep paying
Affordable premiums: Overpriced products lose policyholders to cheaper alternatives
Honest sales process: Mis-sold policies get abandoned once the buyer understands what they actually purchased
Good servicing: Insurers that make it easy to pay premiums and handle queries retain more customers

Low persistency is a composite signal that something went wrong, whether at the point of sale, in product design, or in ongoing service.

The lapse cost to you

When you stop paying premiums on a traditional or ULIP policy within the first few years, you typically get nothing back. The surrender value is zero for the first 2-3 years on most policies. Even after that, you recover a fraction of what you paid.

In FY 2024-25, lapsed policies across the industry carried a combined sum assured of lakhs of crore. Shriram Life alone had 197,100 policies lapse with a combined sum assured of ₹6,907 crore. SBI Life: 315,100 lapsed policies worth ₹28,094 crore in sum assured. HDFC Life: 203,140 lapsed policies worth ₹47,043 crore. These are families who planned on coverage and no longer have it.

What this means for you

Before committing to a 20-year policy, run the premium through your budget for the worst-case scenario: a job loss, a medical expense, a year where income drops. If you can’t sustain the premium through a bad year, the policy will lapse and the premiums you paid are gone. A smaller sum assured with a premium you can always afford is better than a large sum assured you’ll abandon in year 3.

Frequently asked questions

What is persistency ratio in life insurance?

Persistency ratio measures the percentage of policies still active (premiums being paid) at specific checkpoints: 13th month, 25th month, 37th month, 49th month, and 61st month. A 61st-month persistency of 55% means 55 out of every 100 policies sold 5 years ago are still in force. IRDAI publishes this data annually for every life insurer in India.

Which insurer has the best persistency in India?

As of FY 2025, ICICI Prudential leads with 58.8% at the 61st month, followed by Canara HSBC Life (57.1%), Tata AIA (56.7%), and Kotak Life (55.3%). Among all insurers including LIC, ICICI Prudential retains the highest proportion of policyholders over 5 years (source: IRDAI Annual Report 2024-25).

Why does LIC have low 13th-month persistency but decent 61st-month numbers?

LIC’s low month-13 figure (64.1%) reflects its massive agent network selling in rural and semi-urban markets, where some buyers can’t sustain premiums past the first year. But those who survive year 1 tend to stick around, producing a slow, steady decay curve (64% → 50% over 5 years, only 14 percentage points). Private insurers start at 80%+ but often drop 25-30 points to reach 50-55% at month 61. LIC loses fewer people per year, but starts with a weaker base.

What happens to my money if I let my policy lapse?

For term insurance: you lose everything. Term plans have no surrender value. For traditional plans (endowment, money-back): you get nothing if you lapse within the first 2-3 years. After that, you receive a “paid-up” or “surrender” value that is typically 30-50% of premiums paid. For ULIPs: you get the fund value minus charges after the lock-in period (5 years). In all cases, lapsing means losing the insurance cover your family was depending on.

How can I check my insurer’s persistency ratio?

IRDAI publishes persistency data in the annual IRDAI Handbook of Insurance Statistics (available on irdai.gov.in). The Gyansurance Lapse and Persistency Tracker presents 11 years of insurer-by-insurer data in a readable format, and the Insurer Scorecard includes persistency alongside claims, grievances, and solvency data.

Methodology

Data source: IRDAI Annual Report 2024-25, Persistency of Life Insurance Policies (individual policies, premium basis). FY 2025 data reflects policies measured at their respective anniversary months during FY 2024-25.

What’s measured: Persistency is calculated on a premium basis (percentage of premium still being collected at each checkpoint relative to first-year premium). It includes regular premium individual policies only; single premium and group policies are excluded.

Lapse data: From IRDAI Handbook of Insurance Statistics, FY 2024-25. Lapse ratio = lapsed policies / total policies in force at start of year. Sum assured figures are face values, not adjusted for inflation.

Limitations: Persistency data does not distinguish between voluntary lapses (customer chose to stop) and forced lapses (couldn’t afford premiums). It also doesn’t separate term plans from endowment/ULIP plans within each insurer’s portfolio. An insurer with a higher proportion of term plans may show different persistency patterns than one dominated by ULIPs.