Life Insurance Policy Surrenders Rise 11.50%; More Than One Million Policies Lapse

Kathmandu — Both the number of life insurance policies surrendered and the amount paid to policyholders increased during the first three months of the current fiscal year 2026/27 (mid-July to mid-October). However, the number of policies that lapsed due to non-payment of premiums on time declined.

According to data from the Nepal Insurance Authority, 23,795 life insurance policies were surrendered by  mid-October. Insurance companies paid Rs 388.99 million to policyholders for these surrenders.

During the same period last fiscal year, 22,999 policies were surrendered, with payments totaling Rs 348.85 million. Compared with the previous year, the number of surrendered policies increased by 3.46 percent, while the amount paid rose by 11.50 percent. This indicates a growing trend of policyholders terminating their policies and withdrawing their money before the completion of the policy term.

On the other hand, the number of policies lapsing due to delayed premium payments has declined. By mid-October in the current fiscal year, 1,016,712 life insurance policies had lapsed. The figure stood at 1,220,548 during the same period last fiscal year, representing a decrease of 16.70 percent.

The value of lapsed policies also declined. Policies worth Rs 3.68 billion had lapsed by mid-October last fiscal year, compared with Rs 3.61 billion during the same period this year. This represents a decrease of 1.78 percent year-on-year.

The figures suggest that although more policyholders are maintaining their insurance coverage, the tendency to surrender policies and withdraw funds before maturity is increasing. Factors such as policyholders’ financial circumstances, limited understanding of insurance policies and a lack of proper guidance and consultation appear to be contributing to the rising number of surrenders.