Persistency Rate
Definition
The percentage of insurance policies that remain active after a given period (usually 6 or 12 months). High persistency means policyholders keep their coverage and the agent retains commissions.
Understanding Persistency Rate
Persistency rate measures the percentage of policies or accounts that remain active and in-force over a specific period, typically 13 months for the insurance industry. If you write 100 policies and 82 are still active after 13 months, your persistency rate is 82%. Carriers track persistency closely because it affects their profitability, and they often set minimum persistency requirements for agents — typically 80-85%. Falling below these thresholds can result in reduced commission levels, loss of bonus tiers, or contract termination.
How It Works in Practice
Persistency is affected by multiple factors: the quality of the initial sale, the appropriateness of the product for the client's needs, affordability of the premium, the agent's post-sale relationship, and external factors like job loss or health changes. Industry benchmarks: final expense 13-month persistency averages 75-80%, with top agents achieving 85-90%. Medicare Advantage persistency (measured as the percentage not disenrolling during OEP) runs 85-90%. Term life persistency is 85-92%. Auto insurance retention rates are 80-88%.
The financial impact of poor persistency is severe. Each lapsed policy triggers a chargeback (in the advance period), eliminates future renewal income, and removes a potential cross-sell and referral source. A 10% improvement in persistency — from 75% to 85% — can increase an agent's income by 30-40% over five years through preserved renewals and avoided chargebacks.
Why It Matters for Aged Leads
The common misconception is that aged lead customers have lower persistency than real-time lead customers. The data does not consistently support this. Persistency is primarily determined by the quality of the sale, not the origin of the lead. An agent who conducts a thorough needs analysis, ensures the premium is affordable, and follows up after the sale will maintain strong persistency regardless of whether the lead was real-time or aged. In fact, aged lead customers who went through a longer, more deliberate decision process sometimes persist at higher rates than impulse buyers from real-time leads. The key is selling the right product to the right person at the right price — not rushing to close before the lead 'goes cold.'
Related Terms
Final Expense Insurance
A type of whole life insurance policy with a small face value ($5,000-$50,000) designed to cover funeral costs, medical bills, and other end-of-life expenses. One of the most popular verticals for aged leads.
Indexed Universal Life (IUL)
A permanent life insurance policy that builds cash value linked to a market index (like the S&P 500) with downside protection. IUL leads are high-value due to large policy sizes and commissions.
Term Life Insurance
Life insurance that provides coverage for a specific period (10, 20, or 30 years). Term policies are simpler and cheaper than permanent life insurance, making them easier to sell via aged leads.
Medicare Supplement (Medigap)
Private insurance policies that cover costs not paid by Original Medicare, such as copayments, coinsurance, and deductibles. Sold during specific enrollment periods.
Medicare Advantage
An alternative to Original Medicare offered by private insurers. Medicare Advantage plans bundle Parts A, B, and often D, frequently including additional benefits like dental and vision.
Annual Enrollment Period (AEP)
The yearly window (October 15 - December 7) when Medicare beneficiaries can change their Medicare Advantage or Part D plans. The highest-conversion period for aged Medicare leads.
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