• Policies which were sold on a "vanishing premium" basis are expected to exhibit a different payment pattern than those sold on other bases.
  • Thus, although a company can measure persistency, the appropriate standard to which this experience should be compared would be very difficult to determine.
  • The measurement of the persistency itself, however, will also present problems.
  • My company credits premiums as they are received, rather than on the subsequent policy monthaversary.
  • We send bills 15 days prior to the scheduled due date. If a policyholder receives a bill and pays prior to an anniversary due date, the premium will be recorded as received in the prior year.
  • Thus, measuring premium persistency by policy year for annually billed contracts will be very touchy.
  • A better approach may be to measure cumulative payment persistency.
  • This amount, however, is subject to guideline premium limits which must be anticipated.

--  James M. Robinson, Financial Actuary--Domestic Life and Health with Sentry Life Insurance Company

1983 - SOA - Universal Life (RSA83V9N212), Society of Actuaries - 24p