RGA completed an in-depth study looking at assumptions and experience for lapses and mortality at the end of the level premium period for level term business. This study was completed on the behalf of the SOA’s Product Development Section Council and Committee on Life Insurance Research.
This study was divided into two phases:
- The Phase 1 report summarized mortality and lapse assumptions of 41 companies used for pricing and modeling level premium term products. A brief overview of the Phase 1 report was provided in the June 2010 edition of Product Matters!
- The Phase 2 report provided lapse and mortality experience between 2000 and 2008 for 26 companies with level term policies beyond the end of the level period. The focus of the studies was the “shock lapse” and the mortality deterioration that follows.
This article will summarize the Phase 2 report and will focus solely on the results of the 10-year level term product. Best's Review Innovation Showcase has recognized this study.
Posted with permission of the ©Society of Actuaries, Schaumburg, Illinois.