Post Level Premium “Shock Lapse” Experience Survey

Research Projects – Life Insurance


Individual level premium term life insurance products have been available in the marketplace for more than 10 years. Many companies ought to have contracts that have reached the end of the level premium paying period and have been in force for more than 10 or 15 years. The lapse experience in the years following the level premium period is a critical assumption for many purposes including but not limited to: pricing both for the issuing company and for reinsurers, establishment of GAAP benefit reserves and amortization of deferred acquisition costs, and asset adequacy analysis. This paper by Jeffery Dukes and Kathleen Dziedzic and cosponsored by the Product Development Section and Committee on Life Insurance Research, summarizes the results of a company survey on post-level premium period lapse and mortality assumptions and experience for level premium term products.

If you have questions or comments on this report, please contact Ronora Stryker, SOA Research Actuary.

The SOA would like to thank the following members of the Project Oversight Group for their valuable contribution to this project:

  • Jeffrey Beckley, Chair
  • Joseph Berkowitz
  • JJ Lane Carroll
  • Keith Dall
  • Steve Largent
  • Christopher Shanahan
  • Jan Schuh, SOA staff
  • Ronora Stryker, SOA staff