Surrender and withdrawals as a share of total benefits paid by life insurers rise to 39%

New Delhi: Surrender and withdrawals as a share of the total benefits paid by life insurers have increased from 32 per cent in 2021-22 to 39 per cent in 2025-26, Parliament was informed on Monday.

This indicates an increase in surrender and withdrawal behaviour over the last five years, Minister of State for Finance Pankaj Chaudhary said in a written reply in the Lok Sabha.

Also, surrender and withdrawal as a proportion of total benefits has overtaken the maturity benefits paid by life insurance sector, he said.


The proportion of maturity benefits in total benefits paid by life insurers has decreased from 48 per cent in 2021-22 to 37 per cent in 2025-26, he said.

The insurance sector regulator IRDAI has informed that policy surrenders and early exits are influenced by multiple factors, including lack of suitability of the product purchased, lack of affordability of premium, non-fulfilment of policyholder expectations, mis-selling, lack of policyholder awareness and understanding of insurance products, and changes in the financial circumstances of policyholders, he said.

Further, IRDAI continuously monitors trends relating to policy surrenders, withdrawals and persistency to assess their implications for insurers' financial soundness, policyholder protection and the overall stability of the insurance sector, he said.

Based on such monitoring, appropriate supervisory and regulatory measures are undertaken, wherever considered necessary, to strengthen policyholder protection, improve product design and disclosures, promote sound risk management, governance practices and policyholders' awareness, he said.

However, he said, IRDAI has not undertaken any specific assessment of the impact of rising surrender rates on household savings, long-term financial security, or insurance penetration in the country, he said.

IRDAI has informed that as per the current regulatory provisions, non-linked life insurance savings products provide surrender value after payment of at least one full year's premium, with the surrender value scale ensuring reasonableness and value for money for all policyholders, he said.

Further, he said, to safeguard policyholders' interests and ensure fair surrender benefits, IRDAI has established a comprehensive regulatory framework governing surrender-related matters through the IRDAI (Insurance Products) Regulations, 2024 and Master Circular on Life Insurance Products 2024, which provides detailed guidelines, including provisions relating to surrender values.

Replying to another question, Chaudhary said, as informed by National Insurance Company Ltd (NICL), the surveyor management within the company is strictly governed by the Surveyor Management Policy, which is duly approved by the Board of the company.

The allocation of survey jobs to an empanelled surveyor is temporarily halted if a complaint of corruption, severe misconduct, fraud or financial irregularity is received against them by any insured or stakeholder in compliance with Standard Operating Procedures (SOP) for dealing with external frauds, he said.

It is also informed by NICL that, in a certain case of allotment of further work to a surveyor from June 2025, it has been suspended, in compliance with the Standard Operating Procedures (SOP) for dealing with external frauds, he said.

The suspension of allotment of further work is temporarily done until the final investigation is completed, he said.

The matter is concluded as per the procedure mentioned in the provisions of the SOP, he said, adding that no other representation has been received regarding denial of professional livelihood due to pending administrative closures at NICL.