Surge in Life Insurance Policy Surrenders along Economic Slowdown and Rising Costs

The trend of surrendering life insurance policies has seen a significant increase in recent months, driven by the ongoing economic slowdown, rising prices of essentials, and possible manipulations by insurance agents. According to records from the Nepal Insurance Authority (NIA), a total of 45,060 life insurance policies were surrendered in the first five months of the current fiscal year, amounting to an abandoned insured value of Rs 6.10 billion.

The NIA reports that the situation has worsened over the past month. Between mid-November and mid-December, cases of policy surrenders surged by 26 percent, with the total abandoned insured value rising from Rs 4.08 billion to Rs 6.10 billion. This has led to a decline in the percentage of the population under insurance coverage, which dropped to 43.02 percent from 43.09 percent.

In the fiscal year 2023/24, the number of individuals surrendering their life insurance policies increased by 8.67 percent compared to the previous year, with the total abandoned insured value reaching Rs 14.50 billion. The rising trend highlights growing financial pressures on individuals as they face economic uncertainty and the escalating cost of living.