Persistency
The percentage of policies that remain in force after a given period (commonly 13-month or 25-month), directly driving renewal income and book value.
Full Definition
Persistency is the percentage of policies that remain in force after a defined time period. The industry standard measurements are 13-month persistency (share of policies still in force 13 months after issue — captures year-1 lapse) and 25-month persistency (year-2 lapse). Carriers grade agents on persistency and may reduce commission levels, cancel contracts, or demand explanations for agents below target (Final Expense benchmark: 75–82% 13-month; Medicare MA-PD benchmark: 85–92% 13-month; Medigap benchmark: 88–93% 13-month). Persistency is driven by fit-to-need at sale, draft reliability, consumer financial stability, and post-sale service. Persistency × renewal commission = long-term book value, which is often 3–7× FYC on the same policy over 10 years.
Example
Agent A writes 200 Final Expense policies at 82% 13-month persistency. Agent B writes 200 at 62%. On $500 FYC policies, Agent B's 40 lapsed policies trigger $8K+ in chargebacks and sacrifice 5 years of renewals worth ~$12K — a $20K book-value gap on identical FYC.
Related Terms
- Renewal / Residual Commission — Commission paid in years 2+ of a policy's life — smaller per year than FYC but cumulatively the primary source of long-term agent income.
- Chargeback — Carrier reversal of previously paid commission when a policy lapses, is cancelled, or is replaced before the commission protection window ends.
- Book Value — The estimated current-market sale price of an agent's book of business, commonly expressed as a multiple of annualized renewal commissions.
- LTV (Lifetime Value) — The total expected commission (FYC + renewals) from a policy or client over the full duration of the relationship.