What Is LIC’s Persistency Ratio?

However, growing competition has affected the LIC persistency ratio in the past two financial years.

LIC has dominated the life insurance space in India for decades, creating one of the largest distribution networks over the last 65 years. It has continued to remain relevant amidst a lot of competition from private players. The latest LIC claim settlement ratio was reported as 98.74% (for FY 2025-2026) and a solvency ratio of 2.025 (for FY 2024-2025). Apart from these two equally important factors, another crucial aspect to look at is the persistency ratio when assessing an insurer. Let’s look at this aspect in detail.

• What is Persistency Ratio in Life Insurance?

• What is the Persistency Ratio of LIC

• How is the Persistency Ratio Calculated?

• Why is the Persistency Ratio Important?

Persistency Ratio in Life Insurance - An Overview

In the simplest terms, the persistency ratio indicates the percentage of policyholders that have renewed their life insurance policies.A higher persistency ratio depicts that the existing policyholders are satisfied with the insurance and choose to continue their policies. A low ratio implies that not many people have paid renewal premiums to continue their policies at the end of the policy term.

What is the Persistency Ratio of LIC?

The table below highlights LIC of India’s persistency ratios in the 13th month of a policy across different financial years. The 13th month is considered the baseline for measuring as it marks the end of the 1st policy year. However, 61st month is the first month after the fifth year policy anniversary and is a better parameter to check the reliability of customers on the insurer. Below are the persistency ratios based on both the premium and the number of policies separately:

LIC’s persistency ratio seems to be declining overall due to increased market competition. In fact, the 5-year policyholders have caused a major decline of about 3.43% as in March, 2026. It is reported to be lower than some of the leading private life insurers in India. Increasing competition in the insurance space, limited spending capacities, newer products, and rising inflation could be a few major problems leading to this. Moreover, with rising unemployment, individuals may have chosen to discontinue payments for LIC insurance policies to cope with the increasing livelihood costs.

How is the LIC Persistency Ratio Calculated?

LIC’s persistency ratio is either calculated per the annualized premium or the number of policies renewed by LIC of India. Further, the ratio is calculated for a single financial year or a series of financial years. The persistency ratio of an LIC policy for the first year is calculated in the 13th month of the policy term. Similarly, for 2 years, it will be calculated in the 25th month, for 5 years - it will be calculated in the 61st month, and so on.

Why is the LIC Persistency Ratio Important?

Renewal in Term Insurance is very important if you want continued coverage against unforeseen circumstances. If you do not continue to pay premiums throughout the entire duration of the premium paying term, the policy lapses. Now people may have varying reasons to discontinue premium payments such as loss of income, low product performance in the case of ULIPs, availability of better products in the market, etc.

Knowing the persistency ratio of an insurer will help you understand if other people are satisfied with its products and features. This information equips you to make an informed decision and choose the best life insurance policy for yourself and your family. Therefore, before purchasing an LIC policy, do check and compare LIC of India persistency ratio with other insurers and make the decision judiciously.

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