PERSISTENCY OF LIFE INSURANCE SALES: A STATISTICAL ANALYSIS OF THE COMPANY-RELATED AND AGENT-RELATED FACTORS AFFECTING POLICY LAPSATION
This study added significant information regarding the agent-related and company-related factors affecting the untimely termination of life insurance policies. The importance and statistical significance of the relationship between policy termination and the net cost of insurance was established. Previous research on persistency focused on characteristics of the buyer and assumed that good policyholder persistency was related to profitability of the company or reduced net costs to the consumer. The data of 61 life insurance companies were analyzed using multiple linear regression to account for differences in the 24-month company lapse rate and the ordinary company lapse rate. The characteristics of the 1,830 agents of a major life insurer also were analyzed used AID (automatic interactor detector) analysis and multiple linear regression to identify agent-related characteristics that are associated with high lapse rates. Also covered by the study is a definition of the lapse problem, a review of the persistency research pertinent to the study, definitions and measures of persistency and lapsation, and recommendations for improving policyholder persistency. The most significant company-related factors identified were the net cost index of the company's standard ordinary life policy, the average policy size written by the company, and the average premium per thousand dollar unit of ordinary life insurance. The agent-related variables considered most significant were the average collection frequency of the agent's nonpension life insurance sales, the number of years of life insurance sales experience of the agent with the model company, the percentage of buyers with a college degree, the CLU certification of the agent, and the percentage of the agent's volume consisting of term insurance sales.
Year of publication: |
1982-01-01
|
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Authors: | MARTIN, HENRY DALE |
Publisher: |
ScholarlyCommons |
Subject: | Business community |
Saved in:
freely available
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