Guwahati: An increasing number of Indians are surrendering or withdrawing their life insurance policies before maturity, with financial pressure, shifting priorities and dissatisfaction with returns emerging as key reasons.
As per Insurance Regulatory and Development Authority of India (IRDAI) data, the life insurance industry paid a total amount of approximately Rs 7.3 lakh crore to the policyholders in 2025-26. Of this, 38.3 per cent or almost Rs 2.8 lakh crore was in the form of surrenders and withdrawals, which shows that the policies were being sold at an early stage. Meanwhile, the amount of maturity benefits collected once the complete policy period was over was approximately Rs 2.69 lakh crore.
The trend has given rise to questions about why policyholders are opting to cancel long-term insurance policies prior to their expiration.
Rising cost of living, unemployment, inability to keep up with the rising cost of living, and stagnant salaries are cited as some of the reasons. Financial strain may compel policyholders to cash in investments to pay bills.
Mis-selling is also concern , with some customers said to be buying policies that do not get the job done for them. There may also be instances of agents pushing policies aggressively in order to meet sales target , or engaging in sales tactics in order to secure a better incentive than the selling the policy . Additionally, aggressive sales tactics by agents and incentive-driven practices may lead to inappropriate policies being sold.
Other factors also include shift in financial priorities, cash shortages and missed expectation of return on insurance investment leading policyholders to reconsider their insurance investments.