How to Calculate Persistency and Placement

In the life insurance industry and at National Agents Alliance, we use placement and persistency to measure the quality of your performance. The concept is very simple. If you can’t get policies placed or keep policies on the books your persistency, placement and income falls with it. Whereas, if you can get policies placed and remain on the books, your persistency and placement rises along with your income and recognition within NAA.

To get a better understanding we will break down how to find your placement and persistency:

How to calculate placement rate:

First it is important to understand that quantity does not equal quality.

If you submit 10 cases but only eight cases have been placed and made it past the Free Look period (typically 30 days, but some states and products may vary), you take the number of placed cases over the number of submitted cases and divide.

Placement Calculation

Let’s remember that quantity doesn’t equal quality. For example, you increased the number of cases submitted to 100, but for one reason or another 30 cases were not placed. When you put 70 placed cases over 100 submitted cases your placement rate is only 70 percent, which is not better than only submitting 10 cases and placing eight.

Quantity vs Quality

The only way to increase your placement rate is to increase the number of placed cases over the number of submitted cases.

How to calculate 4 month persistency:

To calculate persistency you start with placed cases (not submitted business), which has made it through the Free Look period and are active with premiums paid to date.  If you placed 10 cases and only seven cases earned four months of premium then you have a 70 percent 4-month persistency. You must collect premium for all four months on all 10 cases in order to have 100 percent 4-month persistency.

Persistency Calculation

How to calculate 13-month persistency:

Take one month’s worth of business that has gone through the Free Look period and has stayed on the books.  If all of your cases have stayed on the books and premiums have been paid every month up to 13 months, then you have 100 percent persistency.

For example, if in January you placed 10 cases and in 13 months all 10 cases are still on the books, then you have a 100 percent persistency.

Persistency Calculation 2

You cannot determine your persistency in the 12th month, because you need to ensure that premiums have been met for the 12th month in order to calculate your persistency for that year. The same goes for business written in the second month; you have to wait until 13 months later to calculate that persistency for the second block. At the end of 25 months, you then can calculate your persistency for the whole years’ worth of business.


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