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Research on Lapse in Life Insurance – What Has Been Done and What Needs to Be Done?

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  • Eling, Martin
  • Kochanski, Michael

Abstract

The intention of this paper is to review research on lapse in life insurance and to outline potential new areas of research in this field. We consider theoretical lapse rate models as well as empirical research on life insurance lapse and provide a classification of these two streams of research. More than 50 theoretical and empirical papers from this important field of research are reviewed. Challenges for lapse rate modeling, lapse risk mitigation techniques, and possible trends in future lapse behavior are discussed. The risks arising from lapse are of high economic importance. As such, lapsation is of interest not only to academics, but is also highly relevant for the industry, regulators, and policymakers.

Suggested Citation

  • Eling, Martin & Kochanski, Michael, 2012. "Research on Lapse in Life Insurance – What Has Been Done and What Needs to Be Done?," Working Papers on Finance 1224, University of St. Gallen, School of Finance.
    • Handle: RePEc:usg:sfwpfi:2012:24
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    Cited by:

    1. Mathias Valla, 2024. "A Longitudinal Tree-Based Framework for Lapse Management in Life Insurance," Post-Print hal-04178278, HAL.
    2. David Anaya & Lluís Bermúdez & Jaume Belles-Sampera, 2024. "Modeling paid-ups in life insurance products for risk management," Risk Management, Palgrave Macmillan, vol. 26(3), pages 1-21, September.
    3. Mathias Valla & Xavier Milhaud & Anani Ayodélé Olympio, 2023. "Including individual Customer Lifetime Value and competing risks in tree-based lapse management strategies," Post-Print hal-03903047, HAL.
    4. Koijen, Ralph S.J. & Lee, Hae Kang & Van Nieuwerburgh, Stijn, 2024. "Aggregate lapsation risk," Journal of Financial Economics, Elsevier, vol. 155(C).
    5. Oytun Hac{c}ar{i}z & Torsten Kleinow & Angus S. Macdonald, 2024. "Lapse-supported life insurance and adverse selection," Papers 2409.01843, arXiv.org.

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    More about this item

    Keywords

    Lapse; Surrender; Lapse Modeling; Life Insurance.;
    All these keywords.

    JEL classification:

    • G22 - Financial Economics - - Financial Institutions and Services - - - Insurance; Insurance Companies; Actuarial Studies
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation

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