Policyholder Behavior

  • IAIS Question 83:
    • NAIC Response: Lapse risk is an example of an overall important category of policyholder behavior, which is an important risk in a number of products such as universal life and variable annuities.  (p11)

2015 0213 - IAIS - IAIS Insurance Capital Standard Public Consultation Document - Final NAIC comments – February 13, 2015 - 18p

  • Dynamic policyholder behavior assumptions include lapses, annuitization, partial withdrawals, loans and funding persistency.
    • For all these types of assumptions, it is difficult to obtain experience data.

2003 - SOA - Applied Modeling Concepts, Society of Actuaries - 21p

  • Policy lapses and surrenders are an interesting behavior as it can either be:
    • ... a conscious decision to surrender a policy,
    • ... a forced decision driven by cash needs,
    • ... or a failure (conscious or not) to pay the required premiums to keep a policy inforce.  (p48)

2014 - SOA - Modeling of Policyholder Behavior for Life Insurance and Annuity Products, Society of Actuaries - 92p

  • As a result of the declining interest rates during the first ten years, the amount accumulated in the deposit fund after ten years is less than anticipated when the contract was issued, and less than necessary to keep the contract in force for the long term if the original "target premium" assumptions were continued.
  • Industry experience indicates that policyholders will increase their renewal premium payments in order to maintain their valuable insurance and minimum deposit interest rights."

2004 - ACLI/ IAA - Renewal Premiums and Discretionary Participation Features of a Life Insurance, A Joint Research Project - 52p