ZENITH International Journal of Business Economics & Management Research
Year : 2013, Volume : 3, Issue : 11
First page : ( 134) Last page : ( 141)
Online ISSN : 2249-8826.

Lapsation of life insurance policies: Literature review

Dr. Vidyavathi K.

Associate Professor, Dept of Business Administration, Sahyadri College of Engineering & Management Adyar, Mangalore

Online published on 7 April, 2014.

Abstract

Lapse rate is an important ratio for insurance companies providing life insurance products. Lapse rate is the rate at which life insurance policies terminate because of failure to pay the renewal premiums by the policy holders on stipulated dates. Lapses influence the profitability and liquidity of insurance companies through acquisition cost, loss of income from renewal premiums etc and hence needs to be controlled and managed carefully. For regulators and policy makers it is of interest in designing an appropriate regulatory environment. And for customers lapse rates constitute one of the main indicators to assess the product and service quality of insurers. A significant role of lapse rate in the company's performance has attracted serious research attention world over. Researchers have shown a special interest in the area of lapse rate analysis particularly in indentifying factors influencing lapse rates on life insurance products and statistically assessing their importance. A large number of research papers have been published in various journals in the last two decades. In this paper an attempt is made to provide literature review on lapsation of life insurance policies.

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Keywords

Persistency, lapse rate, premium, insurer, life insurance products.

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