I was wondering why is the surrender value considered when we are discussing the impact of lapse assumption? Isn't surrender value only paid on surrender and not when a policy lapses? Please help.
Yes, technically, if a surrender value is paid then it is a 'surrender' and for products where no surrender value is paid then it is a 'lapse'. However, the phrase 'lapse' is typically used more generally to refer to both types of withdrawal, particularly in the context of experience and assumptions.
