Archive · 20 Jan 2026
Early exits dominate life insurance payouts
In India, more people are taking money out of their life insurance policies early, like when they surrender or withdraw partially, instead of waiting until the policy matures.
This is happening because some people might feel they bought the wrong policy or because the policies are sold in a way that benefits the sellers more than the buyers.
The government and experts are worried about this because it can be bad for people's finances.
They are also looking at how insurance companies make money, as some companies spend a lot on sales and commissions, which might not be good for customers in the long run.
Early exits (surrenders and partial withdrawals) now account for 37% of total life insurance payouts in India.
Only 35% of benefits come from policy maturity, while death claims account for 7.5%.
Overall life insurance payouts have risen from Rs 4 lakh crore in 2020-21 to Rs 6.3 lakh crore in 2024-25.
Mis-selling and high upfront commissions are major concerns, with commission-driven sales channels often prioritizing new sales over long-term customer value.
Public sector insurers have more stable expense bases compared to private insurers, who have seen a sharp increase in commission expenses since 2022-23.
- Who
- Life insurance policyholders, regulators, industry analysts, public and private life insurers
- What
- Shift in life insurance payouts towards early exits, concerns about mis-selling and high commissions
- When
- 2024-25 (with data from 2020-21 for comparison)
- Where
- India
- Why
- Due to mis-selling concerns, high commissions, and aggressive sales practices
- Total Life Insurance Payouts (2024-25)
- Rs 6.3 lakh crore
- Early Exits Share of Payouts
- 37%
- Policy Maturity Share of Payouts
- 35%
- Death Claims Share of Payouts
- 7.5%
- Total Life Insurance Payouts (2020-21)
- Rs 4 lakh crore
Sources
Insurance sector recorded AUM of Rs 74.44 lakh crore, premiums of Rs 11.93 lakh crore in FY25: DFS Secretary
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Non-life insurance sector’s premiums rise 14% in December led by growth in health, motor and fire segments
Gift City reinsurers flag GST & regulatory hurdles
