Update on Interest Sensitive Life Products - Actuary.com
Update on Interest Sensitive Life Products - Actuary.com
Update on Interest Sensitive Life Products - Actuary.com
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Lapse Rates<br />
“Lapsers” Leave with Little or No Cash and High Profit to<br />
Company; “Persisters” May Be<strong>com</strong>e Death Claims and Provide a<br />
Lower Profit to Company<br />
– The L<strong>on</strong>ger a Policy Persists, the Lower the Expected Return<br />
– C<strong>on</strong>trasted to Traditi<strong>on</strong>al Universal <strong>Life</strong> Where Returns Are Largely<br />
Unaffected by the Year in Which a Policy Lapses<br />
<strong>Interest</strong> Rate<br />
6.50% 5.50%<br />
Hypothetical Internal Rate of Return<br />
Impact Over Various Hypothetical<br />
Assumpti<strong>on</strong>s<br />
Lapse Rate<br />
5.00%<br />
3.00%<br />
16.1%<br />
11.4%<br />
(4.6% )<br />
Genworth Financial Fall 2004 Southeastern Actuarial C<strong>on</strong>ference<br />
17
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