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Past year question, Apr 2014 - Paper 2, Question 3

Discussion in 'CP1' started by 1495_sc, Aug 24, 2020.

  1. 1495_sc

    1495_sc Ton up Member

    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.
     
    1495_sc, Aug 24, 2020
    #1
  2. Lindsay Smitherman

    Lindsay Smitherman ActEd Tutor Staff Member

    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.
     
    Lindsay Smitherman, Aug 24, 2020
    #2

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