Lapse Rate

  • 1871-1, NAIC Proceedings, (fka National Insurance Convention)  ---  [BonkNote]  ---  233p
    • (p175) - Letter - From E. W. Peet, Secretary of the National Life Insurance Company of the United States To the Committee of the National Insurance Convention, having in charge the rate of mortality and rate of interest for the calculation of premiums, net valuation
      • The experience of most companies shows that about one half of the policies lapse within ten years from the date of their issue; and probably not more than one-quarter of the policies issued in any year will be in force at the end of twenty years.

 

  • 1951 - SOA - Lapse Rates, by Charles F.B. Richardson and John M. Hartwell, Society of Actuaries - 59p
  • 1959 - SOA - Ordinary Insurance and Annuities: Withdrawal Rates, Society of Actuaries - 5p
    • What has been the trend of lapse rates in recent years? How do lapse rates vary by plan of insurance, by age at issue, by sex, by frequency of premium payment, and by geographical area?
  • (p13) - Michael Pertschuk, Chairman, FTC, Federal Trade Commission. Actually, the vast majority of policyholders do surrender those policies. I think the staff report does expose the figures. But I think that at one point, after 15 years, as I recall, 32 times as many policyholders will have surrendered as terminated through death. So it is a fair measure.
  • Howard Cannon (D-NV), Chairman - Is there a median point that the staff has found? Let's say an average point at which the policies are surrendered?
  • Michael Pertschuk, Chairman, FTC, Federal Trade Commission. Twenty years-Mike, why don't you answer.
  • Michael Lynch, Bureau of Economics -  It's return rates that stabilize after about 20 years. As for lapse rates, they peak in the very first year. The very highest lapse rate is in the first 13 months. The next year typically has a higher lapse rate as well. Thereafter, they continually decline.
  • Howard Cannon (D-NV), Chairman - So that the first 13 months is the highest?
  • Michael Lynch, Bureau of Economics - The 13-months-lapse rate is typically the highest, and it's about 20 percent or so.

1979 0710 and 1017 - GOV (Senate) - FTC Study of Life Insurance Cost Disclosure, Howard Cannon (D-NV)   ---  [BonkNote]  ---   [PDF-592p]

  • 1960 - SOA - First Year Lapse Rate, by Norman F. Buck, Society of Actuaries - 57p
    • Since lapses will probably always be with us, it behooves us to try to minimize or postpone them or adjust to them as best we can.
    • To these ends this paper presents results based on a new study and perhaps offers some new ideas on the subject. 
    • It has been almost nine years since C. F. B. Richardson and J. M. Hartwell presented to the Society their excellent paper on "Lapse Rates" (TSA III, 338). - [Bonk: 1951 - SOA - Lapse Rates, by Charles F.B. Richardson and John M. Hartwell, Society of Actuaries - 59p]
      • They included an extensive list up to that date of published works on the subject.
    • Since then the Life Insurance Agency Management Association has published a number of reports on lapses but little has appeared regarding them in the Transactions.
  • Financed Insurance
    • A. What lapse experience has developed on business financed at or near issue through either policy or bank loans?
    • B. Is the amount of such financed business increasing or decreasing and, if so, why? What measures have been taken to limit the amount of such business and what are their merits and demerits?
    • C. To what extent is the exercise of the Fifth Dividend Option in practice being confined to policyholders interested in minimum deposit policies, and why?

1961 - SOA - Individual Life Insurance: Financed Insurance, Society of Actuaries - 5p