Life insurance companies in India, including Life Insurance Corporation of India (LIC), HDFC Life, and SBI Life, are increasing the minimum and average value of policies to improve persistency and reduce lapses. Persistency refers to the percentage of policies still in force after a certain period, and it is a key metric that reflects customer satisfaction and the quality of sales. The insurers have found that lower-value policies tend to have lower persistency, and therefore, they are focusing on selling higher-value policies.
In the June quarter, LIC’s average ticket size increased by 23% compared to the same period last year, driven by changes in product structures. Similarly, HDFC Life and SBI Life have also recorded an increase in average policy value. The premium amount for a policy depends on the age of the insured, but the mandated rise in minimum sum assured has effectively lifted the premium base across core product lines for insurers.
The move to increase policy values is expected to improve persistency and enhance margins for insurers. Higher-value policies are often associated with more financially stable customers and better renewal rates. SBI Life Insurance, for example, has introduced a new term plan with a cover starting at ₹2 crore, targeting affluent customers. The company’s new business margin was 27.2% as of June 2025.
The increase in policy values is also a response to the government’s decision to tax income from non-ULIP insurance policies with annual premiums above ₹5 lakh, which was aimed at curbing tax arbitrage by high net worth individuals (HNIs). Following this move, insurers have reported a drop in 13th-month persistency ratios. However, by focusing on higher-value policies, insurers expect to improve persistency and report long-term profitability by spreading acquisition costs over a longer duration and reducing the strain on capital.