Lapse and Mortality Experience of Post-Level Premium Period Term Plans

Research Projects – Life Insurance

The Product Development Section Council and the Committee on Life Insurance Research of the Society of Actuaries engaged RGA Reinsurance Company to undertake a research project on level premium term life insurance products with a particular focus on the magnitude and impact of the "shock lapse" at the end of the level premium period.

The project was completed in two phases:

Phase 1 included a survey of the mortality and lapse assumptions used by actuaries for pricing and modeling level premium term products at the end of 2008. A copy of this report can be found here.

Phase 2 includes a study of the mortality and lapse experience of level premium term policies as they transition out of the level premium period. Participating companies were asked to supply policy level inforce and termination records so that experience results could be analyzed at a granular level including, but not limited to, age, gender, risk class, premium jump, and policy size.

This report, authored by Tim Rozar, Scott Rushing and Susan Willeat, presents the results of the Phase 2 study. Supplemental pivot tables with the aggregated 10 year level-term lapse and mortality study results are also available for more customized analysis.

The sponsors would like to thanks the Project Oversight Group for their valuable contribution to this project.

  • Jeff Beckley, Chair
  • Chris Daniels
  • Doug Doll
  • Alex Fayneberg
  • Christie Goodrich
  • Sebastian Kleber
  • David Wylde
  • Jan Schuh, SOA Staff
  • Ronora Stryker, SOA Staff

Questions and comments may be directed to Ronora Stryker, SOA Research Actuary at rstryker@soa.org.