Glossary

Persistency

The share of policies that stay in force over time instead of lapsing or being surrendered, tracked by insurers to price products and judge sales quality.

Also called: persistency rate, policy persistency

Persistency measures how many policies remain in force after a given period. It is usually expressed as a rate, such as 13th-month persistency (the percentage of policies still paying premiums 13 months after issue) or 25th-month persistency. The flip side is the lapse rate.

The math is simple. If an insurer issues 1,000 policies and 880 are still in force at month 13, its 13th-month persistency is 88 percent (a hypothetical figure). Insurers track it by product, distribution channel and individual producer, because high early lapses usually signal poor fit, misleading sales or customers who couldn't afford the premium. Many insurers take back part of an agent's commission when a policy lapses in its first year.

Persistency matters to insurers because they spend heavily up front on commissions and underwriting and recover those costs only if policies stay on the books. Pricing assumptions depend on it in both directions: some products, notably universal life with long secondary guarantees, are priced expecting a certain number of lapses, a practice called lapse-supported pricing. If fewer people lapse than assumed, the product is less profitable. For consumers, the takeaway is practical: an early lapse is usually the most expensive way to own a permanent policy. See what happens if you stop paying premiums.

Last reviewed October 4, 2026

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Related terms

Lapse The end of coverage because a premium went unpaid past the grace period or, in universal life, because cash value could no longer cover the charges. Lapse-supported pricing Pricing that counts on many owners dropping coverage before it pays out, letting the insurer charge less than if everyone kept the policy. Churning Replacing a client's policy or annuity with a new one, often from the same insurer, mainly to earn fresh commissions rather than to help the client. Producer The legal term for a person licensed by a state to sell, solicit or negotiate insurance, covering agents and brokers alike. Premium The amount a policy owner pays an insurer, monthly, quarterly, yearly or in one sum, to keep life insurance coverage in force.

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