Insurance Policy Lapse Rate Statistics 2026: Life, Health and Car Data

The combined termination rate for individual life insurance reached 5.8% of face amount in 2024, up from 4.6% in 2021, according to the American Council of Life Insurers (ACLI) tabulation of National Association of Insurance Commissioners (NAIC) data. Counted by policies instead of dollars, the individual combined termination rate was 7.9% in 2024. Insurance policy lapse rate statistics for the US start from a large in-force base: individual policies in force totaled 134 million, with a face amount of $14.1 trillion.

Lapses spike when prices jump. The Society of Actuaries (SOA) studied two premium structures that can follow a term policy’s level premium period: a jump to an annual renewable term (ART) scale and a Graded scale. It found that shock lapses ranged from 27% to 96% for Jump to ART and from 31% to 80% for Graded. The data below also covers long-term care, India’s persistency ratios, US health and auto coverage, and UK cancellations.

Key Takeaways

• The individual life lapse rate by face amount, excluding surrenders, was 4.7% in 2024, up from 3.7% in 2021, according to ACLI.
• Individual policies ended at a rate 2.1 percentage points higher by count than by face amount in 2024.
• Shock lapses at the end of the level term ranged from 27% to 96% for Jump to ART, depending on the premium increase.
• SBI Life’s 61st-month persistency fell to 58.4% in Q1 FY2027 from 63.6% in Q1 FY2026, according to SBI Life.
• Among Affordable Care Act (ACA) marketplace shoppers, the Center on Budget and Policy Priorities (CBPP) reports that 83% of people who selected a plan effectuated their coverage in 2026, down from 91% in 2025.
• In 2023, more than one in seven drivers countrywide (15.4%) were uninsured, according to the Insurance Research Council (IRC).
• According to the Financial Conduct Authority (FCA), of UK May 2022 policyholders, 13% (6.2 million people) cancelled and/or reduced cover in the 6 months to January 2023 to save money.

Editor’s Choice

• Credit life combined termination rate by face amount in 2024: 10.2%.
• Policies exposed in the SOA and LIMRA 2015-2022 term and whole life study: about 135.9 million.
• US long-term care voluntary lapse rate, 2008-2011: 3.6%.
• SBI Life 13th-month persistency in Q1 FY2027: 87.7%.
• US drivers uninsured or underinsured in 2023: 33.4%.
• ACA Exchange enrollment in February 2026: an estimated 19.2 million.

Insurance Policy Lapse Rate Statistics: US Life Insurance Lapse Rate by Year

• The individual life lapse rate by face amount was 4.7% in 2024, up from 3.7% in 2021 and 4.3% in 2022 and 2023, in the ACLI tables built on NAIC data.
• The individual surrender rate by face amount was 1.1% in 2024, after 0.9% in each year from 2020 to 2022.
• Combined, lapses and surrenders took 5.8% of individual face amount in 2024, against 5.3% in 2014 and 4.6% in 2021. ACLI rounds each rate separately, so in some years lapse plus surrender differs from the combined rate by 0.1 percentage point.
• Of the individual life policies that have been voluntarily terminated, 19% were surrendered, based on face amount, so most of the outflow is lapse rather than surrender.
• That 5.8% outflow runs against the in-force book described in the US life insurance industry statistics, so persistency shapes how fast that book grows alongside new sales.

Source: ACLI Life Insurers Fact Book 2025 (NAIC data), individual life by face amount, 2014 to 2024

What is considered a lapse in insurance coverage?

A policy lapses if its premium is not paid by the end of a specified time, often called the grace period. A surrender is different: The owner ends the policy and takes its cash value, and all coverage under the policy terminates at the time of the surrender. ACLI reports the two separately and adds them into a combined termination rate.

Face amounts show how much coverage disappears. Policy counts show how many policies end, and the two measures diverge.

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About This Data

Compiled from 13 sources: 5 industry, actuarial and research council studies, 3 insurer results releases, 2 government and regulator publications, 2 policy research analyses and 1 academic working paper. Data run from 2008 to mid-2026, and most US life figures cover 2014 to 2024. Sources are official statistics, intercompany experience studies and company disclosures, and figures are updated when those sources publish new editions.

Lapse Rate by Number of Policies vs Face Amount

• By number of policies, the individual combined termination rate was 7.9% in 2024, after 8.5% in 2023.
• The count-based rate ran 2.1 percentage points above the face-amount rate of 5.8% in 2024.
• The individual lapse rate by number of policies was 6.6% in 2024 and 7.3% in 2023, against 5.0% in 2021.

Recent Developments

• August 6, 2026: Life Insurance Corporation of India (LIC) reported 13th and 61st month persistency on premium basis of 75.33% and 61.12% for the quarter ended June 30, 2026, against 75.63% and 63.85% a year earlier.
• July 24, 2026: SBI Life reported 13th-month persistency of 87.7% and 61st-month persistency of 58.4% for the quarter ended June 30, 2026.
• July 15, 2026: HDFC Life reported 13-month and 61-month persistency at 84% and 65% respectively, with renewal collections up 19% year-on-year.
• June 26, 2026: The US Department of Health and Human Services (HHS) estimated that as of February 2026, an estimated 19.2 million individuals are enrolled in ACA Exchange plans.

Group and Credit Life Insurance Termination Rates

• Group life had a lapse rate of 5.1% and a combined termination rate of 5.2% by face amount in 2024.
• Credit life had a lapse rate of 4.9% and a surrender rate of 5.3% by face amount in 2024.
• By number of policies, the group combined termination rate was 4.1% in 2024, down from 7.3% in 2014.

Credit life is the one line where surrenders outweighed lapses in 2024, and its longer trend shows how far its exit rate has come down.

• The credit life combined termination rate by face amount fell from 23.1% in 2014 to 10.2% in 2024.
• The credit life surrender rate by face amount fell from 14.6% in 2014 to 5.3% in 2024.

By the numbers: ACLI’s tables show the credit life combined termination rate by face amount at 10.2% in 2024, against 5.8% for individual and 5.2% for group life. Credit life is tied to a loan, so its exit rate also reflects borrowing patterns alongside household choices about coverage.

Lapse vs Surrender Rates for Life Insurance

• The individual surrender rate by number of policies was 1.3% in 2024 and 1.2% in 2023, after 1.0% from 2020 to 2022.
• Some policies that lapse still have a cash value, entitling the policyholder to some form of payment under a cash surrender value non-forfeiture option.
• Of the individual life policies that have been voluntarily terminated, 19% were surrendered based on face amount.
• Rates of voluntary policy termination by policyholders vary considerably among life insurers, and each company’s rate depends on many factors, including the types of policies written.
• Surrender is the same cash-value choice that shapes annuity surrender and sales data, where owners weigh a payout against keeping the contract.

Is it better to cancel insurance or let it lapse?

The main difference is how the policy ends, though some lapsed policies with cash value still pay the owner something. A policy lapses if its premium is not paid by the end of a specified time, often called the grace period, while a surrender ends a cash-value policy and pays out its cash value. In ACLI’s data, 19% of voluntarily terminated individual policies were surrendered, based on face amount; the rest lapsed.

Term and Whole Life Lapse Experience

• In the SOA Research Institute and LIMRA study, twenty-eight companies contributed data, encompassing approximately 40% of industry sales for term insurance and 47% for whole life insurance.
• The study contains about 135.9 million policies exposed and 5.4 million surrenders and lapses.
• Surrenders and lapses equal about 4% of policies exposed across the study years.
• Among thirty-year level term policies, lapse rates based on count and amount are quite low for attained ages 60 and older, between 1.0% and 1.5%.
• Lapse rates by count and amount for level term product types begin to increase one or two policy years in advance of the end of the level period.
• For whole life, the study found that when policy year is added as a dimension, there is a clear pattern of lower lapse rates with increasing policy size, especially in years one through three.
• Over 60% of the exposure by count is from the whole life product type, but due to the smaller than average face amounts, whole life exposure by amount is considerably less at around 18%.
• The word lapse in the study includes both terminations with value (surrenders) and terminations without value (forfeitures).

Source: SOA Research Institute and LIMRA, 2015-2022 Term and Whole Life Lapse/Surrender Study, December 2024

Post-Level Term Shock Lapse Rates

• Shock lapse and initial mortality deterioration levels were higher for higher premium increases.
• For Jump to ART, lapse rates decreased by duration in the post-level term and began to level out after three to five durations to approximately 10%.
• Differences between the highest and lowest lapse rates for a given premium jump range from 10% to 25% across study participants.
• Policies with a monthly premium mode showed a much lower shock lapse than policies with an annual premium mode, even when premium jump ratios were the same.
• The Graded design led to a lower range of premium jumps and, as a result, lower shock lapse and mortality deterioration.

Key finding: The SOA found that for both premium structures, the highest lapse was the shock lapse at the end of the level term, with shock lapses ranging from 27% to 96% for Jump to ART. For a term policy, lapse risk peaks in the year the bill jumps, though lapses start rising a year or two earlier.

Long-Term Care Insurance Lapse Rates

• The percentage of long-term care insurance policies voluntarily lapsed was 3.6% during the years 2008-2011.
• That rate is 30% lower than when the study examined experience data from 2002-2004.
• The LIMRA and SOA study drew on data from 20 companies with about 19 million covered lives.
• Products with limited benefits exhibit higher rates of voluntary lapse than plans with unlimited benefits.
• These figures come from 2008-2011 experience, so they work as a historical baseline rather than a current rate.

Source: LIMRA and Society of Actuaries long-term care persistency study, April 2016

Life Insurance Persistency Ratios in India

• LIC’s 61st-month persistency on premium basis fell 2.73 percentage points from a year earlier.
• On a number of policies basis, LIC’s 13th month and 61st month ratios were 66.45% and 48.74%, against 64.35% and 51.12% a year earlier.
• SBI Life’s 13th-month persistency rose to 87.7% from 87.1%, while its 61st-month persistency fell to 58.4% from 63.6%.
• HDFC Life said its persistency trends reflect the underlying product and tier mix, with renewal collections up 19% year-on-year.
• The method follows the Insurance Regulatory and Development Authority of India (IRDAI): SBI Life’s persistency ratios are calculated under IRDAI circular IRDAI/NL/MSTCIR/RT/93/6/2024 dated June 14, 2024.

LIC reports persistency two ways, and the policy-count view runs well below the premium view. The gap points to smaller policies dropping out faster, the same pattern the US counts show.

Source: Life Insurance Corporation of India press release, August 6, 2026

Worth noting: LIC’s persistency ratios on number of policies basis for the 13th month and 61st month were 66.45% and 48.74% in the June 2026 quarter. By policy count, fewer than half of LIC’s policies are still in force after five full years, so premium-weighted ratios flatter the retention picture.

How Persistency Falls from Month 13 to Month 61

• SBI Life’s persistency stood at 87.7% at the 13th month and 58.4% at the 61st month in Q1 FY2027.
• Retention drops 29.3 percentage points between SBI Life’s 13th and 61st month readings.
• SBI Life’s 49th-month persistency was 69.1%, against 68.4% in Q1 FY2026.
• SBI Life’s 61st-month ratio fell 5.2 percentage points year on year.

Health Insurance Lapses for Nonpayment in the ACA Marketplace

• ACA Marketplace enrollment fell from a high of 22.1 million people in 2025 to 19.2 million in February 2026, a drop of 13%, according to KFF.
• In 2026, 83% of people who selected a plan effectuated their coverage, down from 91% in 2025, according to the CBPP.
• Returning enrollees had a 3-month grace period for nonpayment of premiums, so most had until March 31, 2026, to pay before coverage was retroactively terminated.
• Enhanced tax credits expired after 2025, leaving enrollees facing an average premium payment increase of 114% to keep the same plan.

Source: HHS ASPE, KFF and CBPP, June 2026

Why it matters: HHS data show that historically, 18% of people who newly owe a premium after auto re-enrollment from a $0 plan have coverage terminated for nonpayment. A first bill acts like a post-level term premium jump, and the same health-cost exposure described in costly health insurance mistakes follows a lapse.

Uninsured Driver Rates by State

• One in three drivers (33.4%) were either uninsured or underinsured in 2023, a 10 percentage point increase in the combined rate since 2017, according to the IRC.
• In 2023, 15.4% of drivers countrywide were uninsured, an increase of 3% over the six years of the study.
• Mississippi had the highest uninsured motorist rate in 2023 at 28.2%, followed by New Mexico at 24.1% and the District of Columbia at 23.1%.
• An uninsured driver is the auto version of a lapsed policy, and the cost lands on insured drivers through uninsured motorist coverage in the US auto insurance market.

Insurance Cancellations During the UK Cost-of-Living Squeeze

• The FCA found in its Financial Lives survey that 13% of May 2022 insurance or protection policyholders (or 6.2 million people) cancelled and/or reduced cover in the 6 months to January 2023, specifically to save money. 8% cancelled one or more policies and 7% reduced their level of cover, which adds to more than 13% because some policyholders did both.
• The number of adults who missed payments on domestic bills or credit commitments in 3 or more of the previous 6 months went up from 4.2 million (8%) in May 2022 to 5.6 million (11%) in January 2023.
• Cancellations on this scale give the UK insurance industry a retention problem that starts in household budgets.

Why do policyholders let insurance lapse?

• Hanming Fang and Edward Kung’s National Bureau of Economic Research (NBER) paper found, in counterfactual simulations of its estimated model, that a large fraction of life insurance lapsations are driven by i.i.d. choice specific shocks, particularly when policyholders are relatively young, with “young” judged within the survey sample the model was estimated on.
• In the same simulations, as the remaining policyholders get older, the role of such i.i.d. shocks gets smaller, and more of their lapsations are driven either by income, health or bequest motive shocks.
• The model was estimated using the life insurance holding information from the Health and Retirement Study (HRS) data.
• In the SOA’s post-level term study, premium increase, attained age and billing type were identified as important factors in both the lapse and mortality analysis.
• The attained age of the policyholder at the end of the level term impacted lapse and mortality with an increasing pattern observed with increasing attained age.
• Across the life, health and UK data, lapses cluster where a bill rises or a household budget tightens.

Conclusion

US individual life policies ended at a combined rate of 5.8% of face amount in 2024, and 7.9% by number of policies. The sharpest lapses follow price shocks, from the end of a level term period to a first ACA premium bill, while India’s insurers keep early retention but lose ground by the fifth policy year.

The next ACLI Fact Book will show whether count-based terminations keep falling from their 2023 high, and the wider insurance industry statistics set those exits against premium growth.