Drop in high-value ticket life policies drags 13th-month persistency ratio

The decline in the share of high-value policies is largely on account of taxation changes in this segment, which HNIs were earlier using to get tax-free returns

   

The 13th-month persistency of life insurers dropped in the first quarter of FY26 (Q1FY26), due to a decline in the share of high-value policies, largely on account of taxation changes in this segment implemented in April 2023.

 

In February 2023, the government decided to tax income from traditional insurance policies, other than unit-linked products (ULIPs), having premium above Rs 5 lakh in a year to plug the arbitrage, which high-net-worth individuals (HNIs) were using to get tax-free returns on their high-value insurance policies through Section 10(10D).

 

Leading private insurers HDFC Life saw its 13th-month persistency ratio dip