Lapse-Supported

1987 – SOA – Risks of Lapse-Supported Products, rsa1987v13n4a12 – Society of Actuaries – 46p

Glenn Daily is particularly irate about what the industry calls “lapse supported pricing,” which is used in illustrations to show higher cash values in later years.
Actuaries who use this technique know that only half the people who buy policies will still have them after seven years.
- After 20 years, only about 25 percent will still have them.
- In the illustration, the actuaries assume that the insurer will spread the premium dollars from those who dropped their policies among those who held on.
- There is, of course, no guarantee the insurer will actually do this.

1994 0227 – NYT – Your Own Account; What’s Wrong With This Picture?, By Mary Rowland – [link]