Modeling The Lapse Rate Of Unit-Linked Insurance Product

In China, the unit-linked insurance products are sold well and the premium grows rapidly, especially these years. So the risks on the unit-linked products should paid more attention to. This paper is aimed to make an insight research on the risk of lapse. The unit-linked product makes the insurer taking fewer risks than the traditional products because the risks are taken by the insured. But for the policyholders, they have the choice to lapse the contract, which makes the uncertain of the insurance company. So the problem of lapse should be regards as a big problem.The goal of this paper is to build a statistical model with proper lapse behavior to describe a unit-linked product. We split the lapse into two parts: basic lapse and lapse depends on economic factors, and use multiple decrement model to model them. For the basic lapse, we provide the experience study on it, and show the method how the insurance company can compute and manage it. For the lapse depends on economic factors, we introduce a function h(x) based on the unit-linked model, and find some candidates of the h(x), then we make an actual estimation to compare the results.Finally, for more general way, this paper uses a marked point process to model the behavior of lapse, and makes some comments to the insurance company.This paper contains 5 chapters. The 1st chapter introduces the Unit-linked product and the lapse rate problem, summarizes the risks of it. The 2nd chapter introduces the research of Lapse rate overall. The 3rd chapter builds a multiple decrement model on the lapse which is divided into two parts: Basic lapse and economic-related lapse. The 4th chapter tells the further research can be made. The 5th chapter is the summarization of the paper, and also makes some advices to the insurance company on the unit-linked products.