The Loyalty Factor: How Persistency is Powering India's Life Insurance Journey

Persistency, long considered one of the most compelling reasons to buy life insurance, is now also one of the most powerful indicators of customers’ confidence in India’s life insurance industry. 

But why is it significant for customers? Let’s understand it with a hypothetical example. Imagine you had invested ₹1.2 lakh in a policy back in 2001 and held onto it until 2025. Assuming a hypothetical average CAGR of 12% year-on-year, that investment would have grown to approximately ₹18.21 lakh by 2025. This example highlights how consistent long-term growth can significantly multiply your initial investment, thanks to the power of compounding. Clearly, long-term consistency in market-linked policies can yield significantly better outcomes than early exits. 

At a deeper level, persistency of customers signifies trust, the integrity of insurer conduct, and the maturity of financial decision-making in the country. 

Persistency as a Loyalty Barometer

Simply put, persistency ratio denotes the percentage of policyholders who continue paying premiums and maintaining their life insurance policies year after year. 

In recent years, there has been a marked improvement in persistency metrics, especially the critical 13th-month and 61st-month ratios — indicators of short-term retention and long-term loyalty, respectively. Today, several private players are reporting 13M persistency in the 80–87% range and 61M persistency in excess of 60–65%. The numbers for the public sector insurer have also been steady. These numbers evidence the increasing faith customers are placing in life insurance — not just as a tax-saving instrument, but as a genuine financial safeguard.

Beneath the statistic lies a compelling story of loyalty, transparency, and long-term value. The story underlines the progress made by India’s life insurers.

COVID-19: A Turning Point in Consumer Perception

The COVID-19 pandemic profoundly shifted how Indians perceive risk, mortality, and protection. Life insurers rose to the occasion by honouring over ₹17,000 crore worth of COVID-19 death claims by March 2022. This act of delivering on promises during a global health and mortality crisis wasn’t just about financial settlement — it was about building trust at a time when people needed it most. It sent a powerful signal to customers: life insurance works when it matters.

This moment of truth catalysed a shift in consumer behaviour. More individuals began seeing life insurance as a long-term commitment, not a short-term expense. This sentiment, in turn, is reflected in improved persistency — with more policyholders choosing to stay invested and protected, even amid economic uncertainties.

Enablers of Persistency: Technology, Accountability and Transparency

Several operational and technological advances are supporting this upward trajectory in persistency:

• Improved Onboarding: Video-based pre-issuance verification (VPIVC), better disclosures, and clear consent protocols ensure that customers understand what they are signing up for. This transparency reduces post-sale disappointment and encourages policy continuation.

• Digital Post-Sale Journeys: From app-based premium reminders to easy access to policy documents and benefit tracking, the post-sale experience has become significantly more customer-friendly, reducing friction in policy renewal and servicing.

• Improved Grievance Redressal: A 99.87% grievance resolution rate testifies to the increased accent on grievance redressal. It has positively impacted the persistency figures. More customers are now feeling confident about the insurers’ abilities to address complaints. 

The Road Ahead: Analytics and Awareness

Since life insurance is a long-term financial planning tool, continued premium contributions drive consistent cash flow to deliver lasting financial returns. Maintaining life insurance policies, especially the savings-linked or investment-orientated ones, for a longer time enables customers to benefit from the power of compounding. By paying premiums regularly, customers develop saving discipline that helps to steadily grow their wealth. 

The next phase of improving persistency lies in proactive engagement. Insurers are deploying data-driven interventions to anticipate and prevent lapses — identifying policyholders at risk of discontinuing due to income disruptions, milestone events like retirement, or lack of awareness. Also, industry-led financial literacy efforts are helping customers understand the compounding value of staying insured. 

As life insurers continue to put customers first — whether during a global pandemic or through everyday digital touchpoints — persistency will remain the industry's most powerful success story. It’s not just a metric but a reflection of the values that the sector stands for: trust, consistency, and commitment to protect.

Persistency is the proof of the pudding. It testifies that people, in general, are believing that life insurance is more than just a financial and investment product. They are placing their faith in life insurance as a tool to protect their financial goals. With insurers putting in more efforts to make people aware about the benefits of sticking to their life insurance plans, persistency will power a resilient and inclusive protection ecosystem in India.