A policy lapsation model

Varsha S Varde

Omega, 1976, vol. 4, issue 3, 331-338

Abstract: Lapsation of a life insurance policy is discontinuation of premium payment by the policy holder during the period of operation of the policy, due to any reason other than the death of the policy holder. The length of life of a lapsed policy can be defined as the period between the month when the last premium instalment was paid and the month the policy was issued. In India, the acceptance of a proposal for life insurance necessitates administrative processes which, together with the agent's commission and medical charges, cost the Life Insurance Corporation almost the whole of the first year's and a major part of the second year's premium. Early lapses, therefore, pose a major financial problem to the Corporation. In this study, the pattern of early policy lapses was empirically investigated with a view to formulating a model for the lapsation phenomenon. It has been realized that the phenomenon is not amenable to any simple statistical model due to an inherent stratification in the population of lapsed policies.

Date: 1976
References: Add references at CitEc
Citations:

Downloads: (external link)
http://www.sciencedirect.com/science/article/pii/0305-0483(76)90022-0
Full text for ScienceDirect subscribers only

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eee:jomega:v:4:y:1976:i:3:p:331-338

Ordering information: This journal article can be ordered from
http://www.elsevier.com/wps/find/supportfaq.cws_home/regional
https://shop.elsevie ... _01_ooc_1&version=01

Access Statistics for this article

Omega is currently edited by B. Lev

More articles in Omega from Elsevier
Bibliographic data for series maintained by Catherine Liu ().