Lapse Experience under Term-to-100 Insurance Policies

Transcription

1 Report Lapse Experience under Term-to-100 Insurance Policies Research Committee Individual Life Subcommittee October 2007 Document Ce document est disponible en français 2007 Canadian Institute of Actuaries

2 TABLE OF CONTENTS Introduction... 4 Participating Companies... 5 Composite Experience... 6 Composite Experience 1999 vs Results... 7 Experience by Calendar Year... 9 Experience by Sex Experience by Smoking Status Experience by Policy Size Experience by Issue Age Experience by Premium Frequency Experience by Smoking Status and Issue Age Experience by Timing of Cash Value (CV) Availability Appendix Scope: Methodology: Calculation of Lapse Rates: Premium Mode: Handling of Purged Data:

3 This report was prepared by: Nikolai Serykh, PhD., FSA, FCIA, CFA The report was approved by the Individual Life Subcommittee of the Research Committee: Lloyd Milani, Chairperson Stephen Beal Marc-André Belzil William Brath Emile Elefteriadis Beth Fitzmaurice Marc Tardif 3

4 LAPSE EXPERIENCE UNDER TERM-TO-100 INSURANCE POLICIES INTRODUCTION This is the fifth lapse experience study covering Term-to-100 Insurance Policies. Lapses have a significant impact on the financial results of this lapse-supported product. The previous studies established the benchmark for the possible level of the ultimate lapse rates. We have limited the scope of this study only to coverages with guaranteed premium and benefits on Term-to-100 and Level Term-to-75 or similar plans. Riders were also excluded. Excluded riders and policies with adjustable features represent 3.5% of the initial exposure by policy count. In addition, the analysis will be split along identical lines as the 2003 Lapse Experience under Universal Life Level Cost of Insurance Policies study. The 1999 study results were limited to one-dimension tables with driving factors like smoking status, sex, size, etc. The multi-dimension tables that combine these drivers were never published. This study provides some multi-factor tables. In addition, grouped data from the study can be downloaded from the CIA website for further analysis including any relevant multi-dimension study. Policies with and without cash value, as well as policies with limited pay, were included in the study. The composite lapse rates represented in Tables 1 to 8 are based on all types of records. The analysis of the cash value availability and corresponding lapse rates was done in Table 9. For each calendar year of the study, the policy was placed in one of the following three classes: 1. Class 1 - Policies with currently available Cash Value; 2. Class 2 - Policies without Cash Value or where Cash Value will be available in 5+ years from policy anniversary in the calendar year of study; 3. Class 3 - Policies where Cash Value will be available in next 5 years. One third of the total exposure by policy number belongs to class 1. Class 2 has the biggest exposure from the three classes 65%. A similar approach was taken to analyze paid-up features. However, this analysis wasn t included in the report due to low credibility of the observed results for policies that were close to the paid-up status. The majority of the submitted policies (99.4%) have life-pay option or premium cease date (date of last premium payment) was 5+ years from the policy anniversary in the calendar year of the study. The 2007 Term-to-100 lapse study was updated at the same time as the UL LCOI study. A comparison of the Term-to-100 results with UL LCOI can be found in the Lapse Experience under Universal Life Level Cost of Insurance Policies report. There is a similar lapse rate pattern for the two products, especially in durations 1 to 8 based on sum assured. 4

5 The study covers calendar years , compared to in the 1999 study. The current study has 104% more exposure by number and 39% more by sum assured than in the 1999 study. The study was limited to the 25 th duration. There were only a few policies exposed beyond duration 25. Finally, there are data limitations that need to be taken into consideration. 1. Not every company contributed every year. Therefore, there are some discontinuities when data are broken down too finely (please refer to the Participating Company table). 2. Care is required when interpreting lapse rates beyond duration 20, where the data have relatively low statistical credibility. For example, the number of lapses decreased from 153 at duration 20 to 2 at duration 25. As well, the results of cells broken down along multiple criteria may have very few lapses associated with that given segment. 3. Cash Value availability was defined based on Date of Cash Value on set the date when Cash Value is first available. In some cases, this date wasn t provided in the submitted data. These records were treated as policies without Cash Value. 4. Time to paid-up status was defined based on Premium Cease Date the date when policy becomes paid-up. This date wasn t always provided in the submitted date. These policies were treated as life-pay policies. PARTICIPATING COMPANIES The following companies contributed data to our study. The table indicates the amount of exposure contributed by company and by experience year: Exposure by Number Split by Company and Experience Year Company Exposure AIG ,103 2,420 3,582 Canada Life 9,508 9,828 10,078 10,514 11,102 11,763 62,793 Desjardins Financial Security 138, , , , , , ,650 Empire Life ,758 17,758 Industrial Alliance 373, , , , , ,515 2,154,600 Manulife Financial ,372 89,687 89, ,224 Standard Life 4,699 5,255 5,824 5,996 5,802 5,653 33,230 Sun Life 28,458 28,259 27,799 27,629 27,462 26, ,531 Transamerica Life 82,967 92,535 91,486 90,890 90,201 89, ,666 Wawanesa - 2,378 2,687 3,328 3,970 4,684 17,047 Grand Total 637, , , , , ,885 4,057,080 5

6 Composite Experience Table 1a - Composite Lapse Rates Policy By Number of Policies By Amount of Sum Assured ($000,000) Year Number Lapse Amount Lapses # Exposed Rate Exposed Lapses Lapse Rate 1 87,784 6, % 6, % 2 99,649 6, % 6, % 3 116,317 6, % 6, % 4 144,333 6, % 7, % 5 186,733 7, % 10, % 6 235,249 8, % 13, % 7 294,478 8, % 17, % 8 345,133 8, % 19, % 9 381,740 7, % 22, % ,576 6, % 26, % ,453 6, % 26, % ,572 4, % 23, % ,941 3, % 18, % ,751 2, % 14, % ,839 1, % 11, % ,188 1, % 8, % 17 66, % 4, % 18 40, % 2, % 19 27, % 1, % 20 19, % 1, % 21 12, % % 22 5, % % 23 1, % % % % % % Total 4,057,080 92, % 251,529 5, % 8% 7% 6% Chart 1a - Composite Lapse Rates 5% 4% 3% By Number of Policies By Amount of Sum Assured ($000,000) 2% 1% 0% Policy Year 6

7 Composite Experience 1999 vs Results Table 1b - Composite Lapse Rates (by Number of Policies) Policy 1999 Study 2007 Study Year Number Lapse Number Lapses # Exposed Rate Exposed Lapses # Lapse Rate 1 322,909 32, % 87,784 6, % 2 300,553 24, % 99,649 6, % 3 276,015 20, % 116,317 6, % 4 248,668 14, % 144,333 6, % 5 226,977 10, % 186,733 7, % 6 182,320 6, % 235,249 8, % 7 132,298 3, % 294,478 8, % 8 98,645 2, % 345,133 8, % 9 76,907 1, % 381,740 7, % 10 53, % 414,576 6, % 11 30, % 411,453 6, % 12 18, % 365,572 4, % 13 10, % 289,941 3, % 14 4, % 223,751 2, % 15 1, % 169,839 1, % Total 1,984, , % 3,766,549 90, % 12% Chart 1b - Composite Lapse Rates (by Number of Policies) 10% 8% 6% 4% 1999 Study 2007 Study 2% 0% Policy Year 7

8 Table 1c - Composite Lapse Rates (by Amount of Sum Assured ($000,000)) Policy 1999 Study 2007 Study Year Amount Lapse Amount Lapses Exposed Rate Exposed Lapses Lapse Rate 1 29,891 2, % 6, % 2 28,419 2, % 6, % 3 25,996 1, % 6, % 4 23,265 1, % 7, % 5 21, % 10, % 6 16, % 13, % 7 11, % 17, % 8 8, % 19, % 9 6, % 22, % 10 4, % 26, % 11 2, % 26, % 12 1, % 23, % % 18, % % 14, % % 11, % Total 181,164 9, % 232,250 4, % 9% Chart 1c - Composite Lapse Rates (by Amount of Sum Assured) 8% 7% 6% 5% 4% 3% 1999 Study 2007 Study 2% 1% 0% Policy Year 8

9 Experience by Calendar Year Policy Table 2a - Composite Lapse Rates and Exposure by Calendar Year (by Number of Policies) Lapse Rates (Single and Joint Policies) Year % 8.1% 8.4% 6.3% 5.4% 5.1% 7.3% 2 7.2% 7.4% 7.1% 6.2% 5.3% 4.6% 6.4% 3 6.0% 5.6% 5.9% 5.4% 4.6% 4.6% 5.5% 4 4.9% 5.1% 4.7% 4.5% 3.8% 3.5% 4.6% 5 4.6% 4.2% 3.9% 3.5% 3.3% 2.9% 4.0% 6 3.9% 4.0% 3.6% 2.9% 2.8% 2.2% 3.5% 7 2.8% 3.3% 3.4% 2.4% 2.2% 2.1% 2.8% 8 2.7% 2.7% 2.7% 2.5% 2.0% 1.6% 2.5% 9 2.2% 2.1% 2.1% 1.9% 1.8% 1.5% 2.0% % 1.8% 1.9% 1.5% 1.5% 1.5% 1.7% % 1.6% 1.7% 1.6% 1.3% 1.3% 1.5% % 1.5% 1.5% 1.2% 1.2% 0.9% 1.2% % 1.1% 1.4% 1.1% 1.0% 0.9% 1.1% % 0.9% 0.8% 1.0% 1.0% 0.8% 0.9% % 0.7% 0.9% 1.0% 0.9% 0.8% 0.9% % 0.7% 0.8% 2.2% 0.7% 0.8% 0.9% % 0.8% 0.8% 0.9% 0.4% 0.5% 0.6% % 0.7% 0.7% 0.7% 0.5% 0.5% 0.6% % 0.6% 1.2% 0.6% 0.7% 0.4% 0.7% % 0.5% 1.1% 1.0% 0.8% 0.6% 0.8% % 0.6% 0.5% 0.9% 0.6% 0.8% 0.7% % 0.0% 2.4% 0.4% 0.8% 0.7% 0.8% % 0.0% 0.0% 0.6% 1.1% 0.8% 0.9% % 0.0% 0.0% 0.0% 0.0% 0.8% 0.6% % 0.0% 0.0% 0.0% 0.0% 1.3% 1.1% Total 3.4% 3.0% 2.6% 2.0% 1.6% 1.4% 2.3% Exposure (Single and Joint Policies) 1 20,140 16,715 10,732 13,170 14,170 12,857 87, ,827 18,807 15,136 11,864 12,241 15,774 99, ,271 24,685 17,403 16,442 11,100 13, , ,907 31,876 23,100 18,709 15,494 12, , ,546 41,316 30,023 24,158 17,838 16, , ,905 56,096 39,423 30,937 23,255 18, , ,741 65,972 53,518 40,319 29,928 24, , ,610 79,177 63,361 54,775 39,140 30, , ,046 76,979 76,635 69,936 53,263 38, , ,252 66,411 75,260 88,463 68,394 52, , ,753 63,367 64,766 84,160 86,816 67, , ,364 44,383 61,935 69,436 82,558 85, , ,544 21,141 43,471 66,028 68,377 81, , ,550 9,558 20,797 54,237 64,999 67, , ,707 6,760 9,395 27,998 53,528 64, , ,084 7,662 6,638 13,198 27,509 53, , ,129 6,978 7,522 7,850 13,008 27,284 66, ,299 4,053 6,847 7,564 7,714 13,005 40, ,276 3,977 6,721 7,435 7,674 27, ,247 3,877 6,607 7,316 19, ,215 3,789 6,525 12, ,182 3,726 5, ,137 1, Total 637, , , , , ,885 4,057,080 9

10 10.0% Chart 2a - Composite Lapse Rates by Calendar Year (by Number of Policies) 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% % 1.0% 0.0% Policy Year 10

11 Policy Table 2b - Composite Lapse Rates and Exposure by Calendar Year (by Amount of Sum Assured ($000,000)) Lapse Rates (Single and Joint Policies) Year % 6.5% 6.2% 4.5% 4.4% 4.3% 5.4% 2 6.6% 7.6% 6.5% 5.1% 4.4% 4.2% 5.7% 3 6.1% 6.3% 5.7% 5.3% 3.5% 3.8% 5.2% 4 5.0% 5.2% 4.5% 4.3% 3.4% 3.0% 4.4% 5 4.4% 4.0% 4.2% 3.3% 3.2% 2.4% 3.8% 6 3.7% 3.9% 3.5% 2.7% 3.2% 2.1% 3.4% 7 2.6% 2.9% 3.3% 2.4% 2.2% 2.1% 2.7% 8 2.4% 2.4% 2.5% 2.2% 2.0% 1.4% 2.3% 9 1.9% 1.9% 1.9% 1.6% 1.4% 1.4% 1.7% % 1.5% 1.7% 1.2% 1.3% 1.1% 1.4% % 1.5% 1.6% 1.6% 1.2% 1.1% 1.4% % 1.4% 1.2% 1.1% 1.0% 0.8% 1.0% % 1.0% 1.1% 0.9% 0.9% 0.8% 0.9% % 0.9% 0.6% 0.7% 0.9% 0.9% 0.8% % 0.5% 0.7% 0.7% 0.8% 0.7% 0.7% % 0.5% 0.7% 1.3% 0.6% 0.9% 0.8% % 0.5% 0.6% 0.6% 0.4% 0.4% 0.5% % 0.6% 0.7% 0.3% 0.4% 0.5% 0.5% % 0.8% 0.8% 0.6% 0.6% 0.4% 0.6% % 0.3% 1.1% 0.7% 0.4% 0.4% 0.5% % 0.3% 0.2% 0.6% 0.5% 1.0% 0.8% % 0.0% 1.8% 0.2% 0.8% 0.7% 0.7% % 0.0% 0.0% 0.5% 2.3% 1.1% 1.4% % 0.0% 0.0% 0.0% 0.0% 0.6% 0.5% % 0.0% 0.0% 0.0% 0.0% 1.0% 0.9% Total 3.0% 2.7% 2.3% 1.7% 1.5% 1.3% 2.0% Exposure (Single and Joint Policies) 1 1, ,132 1,294 1,097 6, , ,081 1,402 6, ,543 1, , ,172 6, ,029 1,483 1,123 1,195 1, , ,919 1,961 1,398 1,366 1,146 1,227 10, ,268 2,904 1,875 1,641 1,318 1,278 13, ,860 4,235 2,775 2,179 1,595 1,431 17, ,175 4,791 4,084 3,182 2,121 1,646 19, ,625 4,113 4,657 5,332 3,096 2,153 22, ,408 3,629 4,026 6,702 5,233 3,109 26, ,499 3,415 3,550 5,649 6,588 5,214 26, ,481 2,482 3,344 4,433 5,539 6,570 23, ,469 2,436 4,070 4,371 5,501 18, ,448 3,877 4,018 4,343 14, ,335 3,837 3,998 11, ,308 3,828 8, ,303 4, , , , Total 35,126 35,652 35,159 47,745 48,047 49, ,529 11

12 8.0% Chart 2b - Composite Lapse Rates by Calendar Year (by Amount of Sum Assured) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% % 0.0% Policy Year

13 Table 2c - Composite Lapse Rates and Exposure by Calendar Year (by Number of Policies) Policy Lapse Rates (Single Policies Only) Year % 8.1% 8.6% 6.4% 5.5% 5.1% 7.4% 2 7.2% 7.4% 7.1% 6.2% 5.4% 4.6% 6.5% 3 6.0% 5.5% 5.9% 5.4% 4.7% 4.6% 5.5% 4 4.9% 5.1% 4.6% 4.6% 3.9% 3.5% 4.6% 5 4.6% 4.2% 3.8% 3.5% 3.4% 3.0% 4.0% 6 3.9% 4.0% 3.6% 3.0% 2.8% 2.2% 3.5% 7 2.8% 3.3% 3.4% 2.4% 2.2% 2.2% 2.8% 8 2.6% 2.7% 2.7% 2.5% 2.0% 1.6% 2.5% 9 2.2% 2.2% 2.1% 1.9% 1.8% 1.6% 2.0% % 1.8% 1.9% 1.5% 1.5% 1.5% 1.7% % 1.6% 1.7% 1.6% 1.3% 1.3% 1.6% % 1.5% 1.5% 1.2% 1.2% 0.9% 1.2% % 1.1% 1.4% 1.1% 1.0% 0.9% 1.1% % 0.9% 0.8% 1.0% 1.0% 0.8% 0.9% % 0.7% 0.8% 1.0% 0.9% 0.8% 0.9% % 0.7% 0.7% 2.2% 0.7% 0.8% 0.9% % 0.8% 0.7% 0.9% 0.4% 0.5% 0.6% % 0.8% 0.7% 0.7% 0.5% 0.5% 0.6% % 0.5% 1.1% 0.6% 0.7% 0.3% 0.6% % 0.5% 1.1% 1.0% 0.8% 0.7% 0.8% % 0.6% 0.5% 1.0% 0.8% 0.8% 0.8% % 0.0% 2.4% 0.4% 0.8% 0.8% 0.8% % 0.0% 0.0% 0.6% 1.1% 0.7% 0.8% % 0.0% 0.0% 0.0% 0.0% 0.8% 0.6% % 0.0% 0.0% 0.0% 0.0% 1.3% 1.1% Total 3.4% 3.0% 2.6% 2.0% 1.6% 1.4% 2.3% Exposure (Single Policies Only) 1 19,398 16,128 10,309 12,500 13,446 12,149 83, ,373 18,093 14,604 11,179 11,610 14,941 94, ,376 23,313 16,737 15,629 10,458 12, , ,698 30,086 21,827 17,789 14,721 11, , ,086 39,194 28,354 22,682 16,945 15, , ,824 53,651 37,424 29,130 21,816 17, , ,001 62,934 51,200 38,203 28,169 22, , ,953 76,498 60,442 52,393 37,075 28, , ,248 75,343 74,036 66,902 50,936 36, , ,456 65,578 73,669 85,647 65,421 50, , ,981 62,552 63,954 82,436 84,045 64, , ,596 43,614 61,143 68,553 80,865 83, , ,769 20,375 42,721 65,204 67,513 79, , ,641 8,787 20,042 53,466 64,190 66, , ,658 5,854 8,635 27,253 52,772 63, , ,995 6,615 5,740 12,451 26,775 52, , ,244 5,895 6,482 6,975 12,278 26,559 61, ,182 3,169 5,777 6,544 6,852 12,281 35, ,158 3,094 5,672 6,422 6,820 23, ,130 3,016 5,565 6,313 16, ,102 2,938 5,488 10, ,069 2,877 4, ,025 1, Total 613, , , , , ,645 3,904,604 13

14 11.0% Chart 2c - Composite Lapse Rates by Calendar Year (by Number of Policies - Single Policies Only) 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% % 0.0% Policy Year 14

15 Policy Table 2d - Composite Lapse Rates and Exposure by Calendar Year (by Amount of Sum Assured ($000,000)) Lapse Rates (Single Policies Only) Year % 6.8% 6.5% 4.4% 4.7% 4.6% 5.6% 2 6.8% 7.7% 6.7% 5.5% 4.6% 4.4% 5.9% 3 6.1% 6.0% 5.8% 5.3% 3.7% 4.0% 5.3% 4 5.0% 5.0% 4.5% 4.3% 3.8% 3.1% 4.5% 5 4.5% 4.0% 4.1% 3.4% 3.5% 2.6% 3.9% 6 3.7% 4.0% 3.4% 2.7% 3.1% 2.1% 3.4% 7 2.6% 2.9% 3.4% 2.4% 2.3% 2.2% 2.7% 8 2.5% 2.4% 2.5% 2.3% 2.0% 1.5% 2.3% 9 1.9% 2.0% 1.9% 1.6% 1.5% 1.5% 1.8% % 1.6% 1.8% 1.2% 1.3% 1.2% 1.4% % 1.6% 1.6% 1.7% 1.2% 1.2% 1.5% % 1.5% 1.2% 1.1% 1.1% 0.8% 1.1% % 1.0% 1.1% 0.9% 1.0% 0.8% 0.9% % 0.9% 0.6% 0.7% 0.9% 0.9% 0.8% % 0.5% 0.7% 0.7% 0.8% 0.7% 0.7% % 0.5% 0.6% 1.3% 0.6% 0.8% 0.8% % 0.5% 0.5% 0.6% 0.4% 0.4% 0.4% % 0.8% 0.6% 0.3% 0.4% 0.5% 0.5% % 0.7% 0.7% 0.6% 0.6% 0.3% 0.5% % 0.3% 1.0% 0.7% 0.4% 0.5% 0.5% % 0.3% 0.2% 0.7% 0.6% 1.0% 0.8% % 0.0% 1.8% 0.2% 0.8% 0.7% 0.7% % 0.0% 0.0% 0.5% 2.3% 1.1% 1.4% % 0.0% 0.0% 0.0% 0.0% 0.6% 0.5% % 0.0% 0.0% 0.0% 0.0% 1.0% 0.9% Total 3.0% 2.7% 2.3% 1.7% 1.5% 1.3% 2.0% Exposure (Single Policies Only) , , , ,228 5, ,375 1, ,019 5, ,829 1, , , ,647 1,765 1,247 1, ,039 8, ,852 2,631 1,686 1,450 1,130 1,092 11, ,457 3,822 2,513 1,954 1,407 1,249 15, ,935 4,395 3,684 2,884 1,901 1,462 18, ,512 3,869 4,270 4,881 2,802 1,936 21, ,299 3,509 3,787 6,253 4,788 2,819 24, ,382 3,303 3,432 5,364 6,144 4,774 25, ,418 2,365 3,234 4,252 5,257 6,131 22, ,406 2,321 3,932 4,195 5,222 17, ,386 3,744 3,880 4,168 14, ,270 3,705 3,863 11, ,244 3,702 8, ,239 4, , , Total 32,607 33,061 32,590 44,339 44,552 46, ,257 15

16 8.0% Chart 2d - Composite Lapse Rates by Calendar Year (by Amount of Sum Assured - Single Policies Only) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% % 0.0% Policy Year 16

17 Experience by Sex Table 3a - Composite Lapse Rates and Exposure by Sex (by Number of Policies) Policy Lapse Rates Year Male Single Female Single Joint 1st Joint 2nd Composite 1 7.4% 7.5% 8.0% 2.6% 7.3% 2 6.7% 6.3% 7.7% 4.7% 6.4% 3 5.8% 5.2% 6.6% 5.1% 5.5% 4 4.8% 4.5% 5.9% 4.2% 4.6% 5 4.2% 3.8% 4.3% 3.9% 4.0% 6 3.6% 3.4% 3.9% 4.0% 3.5% 7 2.9% 2.8% 2.8% 2.4% 2.8% 8 2.6% 2.3% 3.2% 1.8% 2.5% 9 2.1% 1.9% 2.3% 1.3% 2.0% % 1.6% 2.3% 0.8% 1.7% % 1.5% 1.9% 0.5% 1.5% % 1.2% 1.7% 0.5% 1.2% % 1.1% 1.3% 0.6% 1.1% % 0.9% 1.4% 0.8% 0.9% % 1.0% 0.6% 1.0% 0.9% % 1.1% 0.9% 1.0% 0.9% % 0.6% 0.3% 0.9% 0.6% % 0.7% 0.0% 0.6% 0.6% % 0.8% 0.0% 0.9% 0.7% % 0.9% 0.0% 0.7% 0.8% % 0.9% 0.0% 0.4% 0.7% % 0.8% 0.0% 0.6% 0.8% % 0.9% 0.0% 1.8% 0.9% % 0.9% 0.0% 0.0% 0.6% % 1.5% 0.0% 1.1% Total 2.3% 2.3% 3.4% 1.9% 2.3% Exposure 1 40,313 43,617 1,877 1,976 87, ,132 49,668 2,201 2,648 99, ,106 58,132 2,576 3, , ,454 72,200 3,086 4, , ,886 93,349 3,635 5, , , ,612 4,192 7, , , ,411 4,721 8, , , ,656 4,769 8, , , ,302 4,499 7, , , ,809 4,199 7, , , ,844 3,739 6, , , ,135 3,045 4, , , ,554 2,179 3, , , ,038 1,519 3, , ,438 76,392 1,054 3, , ,991 48, , , ,594 25, ,043 66, ,328 14, ,632 40, ,447 9, ,916 27, ,347 6, ,023 19, ,458 3, ,000 12, ,999 1, , , , Total 1,960,560 1,944,044 48, ,189 4,057,080 17

18 9.0% Chart 3a - Lapse Rates by Sex (by Number of Policies) 8.0% 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Male Single Joint 1st Female Single Joint 2nd 0.0% Policy Year 18

19 Table 3b - Lapse Rates and Exposure by Sex (by Amount of Sum Assured ($000,000)) Policy Lapse Rates Year Male Single Female Single Joint 1st Joint 2nd Composite 1 5.2% 6.1% 5.7% 2.7% 5.4% 2 5.9% 5.8% 6.8% 3.4% 5.7% 3 5.4% 5.1% 6.8% 4.5% 5.2% 4 4.4% 4.5% 6.6% 3.1% 4.4% 5 4.0% 3.7% 4.5% 2.4% 3.8% 6 3.3% 3.5% 3.9% 3.2% 3.4% 7 2.6% 2.9% 2.9% 2.3% 2.7% 8 2.3% 2.4% 3.6% 1.2% 2.3% 9 1.7% 1.8% 2.4% 0.9% 1.7% % 1.5% 2.1% 0.8% 1.4% % 1.5% 1.9% 0.4% 1.4% % 1.1% 1.3% 0.4% 1.0% % 0.9% 1.2% 0.2% 0.9% % 0.8% 1.4% 0.3% 0.8% % 0.8% 0.6% 0.4% 0.7% % 0.9% 0.6% 2.1% 0.8% % 0.4% 0.2% 0.9% 0.5% % 0.7% 0.0% 0.7% 0.5% % 0.7% 0.0% 1.0% 0.6% % 0.6% 0.0% 0.6% 0.5% % 0.9% 0.0% 0.4% 0.8% % 0.9% 0.0% 0.9% 0.7% % 1.0% 0.0% 1.8% 1.4% % 1.1% 0.0% 0.0% 0.5% % 2.3% 0.0% 0.9% Total 1.9% 2.2% 3.3% 1.7% 2.0% Exposure 1 2,848 2, , ,001 2, , ,138 2, , ,663 3, , ,803 4, , ,699 5, ,122 13, ,937 6, ,297 17, ,692 7, ,344 19, ,622 8, ,311 22, ,782 9, ,268 26, ,663 9, ,167 26, ,142 8, , ,148 6, , ,054 5, , ,393 3, , ,496 2, , ,253 1, , , , , , , Total 141,518 91,739 4,067 14, ,529 19

20 8.0% Chart 3b - Lapse Rates by Sex (by Amount of Sum Assured) 7.0% 6.0% 5.0% 4.0% 3.0% 2.0% 1.0% Male Single Joint 1st Female Single Joint 2nd 0.0% Policy Year 20

21 Experience by Smoking Status Table 4a - Lapse Rates and Exposure by Smoking Status (by Number of Policies) Policy Lapse Rates (Single Policies Only) Exposure (Single Policies Only) Year Non-Smoker Smoker Aggregate Composite Non-Smoker Smoker Aggregate Composite 1 5.0% 12.6% 8.2% 7.4% 54,558 25,321 4,051 83, % 9.8% 6.3% 6.5% 61,799 26,209 6,791 94, % 7.9% 5.1% 5.5% 70,740 29,143 10, , % 6.3% 5.1% 4.6% 86,915 34,445 15, , % 5.2% 4.5% 4.0% 111,245 43,195 22, , % 4.5% 3.9% 3.5% 139,964 53,014 30, , % 3.5% 3.4% 2.8% 175,542 66,084 39, , % 3.0% 3.1% 2.5% 206,333 77,482 47, , % 2.4% 2.5% 2.0% 230,500 85,888 52, , % 2.0% 2.2% 1.7% 253,091 93,408 56, , % 1.8% 1.8% 1.6% 255,290 92,545 53, , % 1.5% 1.5% 1.2% 230,149 82,610 45, , % 1.3% 1.4% 1.1% 184,343 65,905 34, , % 1.0% 1.4% 0.9% 145,176 50,761 22, , % 1.1% 1.4% 0.9% 113,035 37,604 14, , % 1.3% 1.5% 0.9% 80,079 24,243 5, , % 0.7% 1.6% 0.6% 47,472 12,861 1,101 61, % 1.0% 0.7% 0.6% 27,750 7, , % 0.8% 0.6% 0.6% 18,153 4, , % 0.9% 1.3% 0.8% 12,528 3, , % 0.8% 1.1% 0.8% 7,505 2, , % 0.7% 1.9% 0.8% 3, , % 1.3% 0.8% 0.8% 1, , % 0.0% 0.0% 0.6% % 0.0% 0.8% 1.1% Total 1.9% 3.1% 2.7% 2.3% 2,517, , ,887 3,904,604 14% 12% 10% 8% 6% 4% 2% 0% Chart 4a - Lapse Rates by Smoking Status (by Number of Policies) Policy Year Non-Smoker Smoker Aggregate 21

22 Table 4b - Lapse Rates and Exposue by Smoking Status (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Single Policies Only) Exposure (Single Policies Only) Year Non-Smoker Smoker Aggregate Composite Non-Smoker Smoker Aggregate Composite 1 4.4% 10.9% 7.2% 5.6% 4, , % 9.9% 6.5% 5.9% 4,550 1, , % 8.4% 5.4% 5.3% 4,696 1, , % 6.7% 5.2% 4.5% 5,355 1, , % 5.5% 4.3% 3.9% 6,821 1, , % 4.8% 3.6% 3.4% 9,168 2, , % 3.8% 3.3% 2.7% 11,943 2, , % 3.2% 3.1% 2.3% 14,133 3, , % 2.4% 2.3% 1.8% 16,580 3,612 1,078 21, % 2.0% 2.0% 1.4% 19,250 4,034 1,171 24, % 2.0% 1.7% 1.5% 20,202 4,080 1,118 25, % 1.5% 1.4% 1.1% 18,096 3, , % 1.4% 1.4% 0.9% 14,109 2, , % 1.1% 1.3% 0.8% 11,364 2, , % 1.1% 1.3% 0.7% 9,189 1, , % 1.3% 1.3% 0.8% 6,801 1, , % 0.7% 1.5% 0.4% 3, , % 1.2% 0.4% 0.5% 2, , % 0.7% 0.5% 0.5% 1, , % 0.8% 0.9% 0.5% % 0.7% 1.0% 0.8% % 0.6% 1.4% 0.7% % 3.2% 0.4% 1.4% % 0.0% 0.0% 0.5% % 0.0% 0.4% 0.9% Total 1.7% 3.1% 2.5% 2.0% 185,280 38,379 9, ,257 12% Chart 4b - Lapse Rates by Smoking Status (by Amount of Sum Assured) 10% 8% 6% 4% Non-Smoker Smoker Aggregate 2% 0% Policy Year 22

23 Experience by Policy Size Policy Lapse Rates (Single Policies Only) Table 5a - Lapse Rates and Exposure by Policy Size (by Number of Policies) Average Exposure (Single Policies Only) Year <$100K $100K-249K $250K+ Composite Size ($) <$100K $100K-249K $250K+ Composite 1 8.2% 5.4% 3.3% 7.4% 64,211 63,702 16,994 3,235 83, % 5.7% 5.6% 6.5% 60,023 73,939 17,649 3,212 94, % 5.4% 4.7% 5.5% 54,057 89,261 17,920 3, , % 4.8% 3.5% 4.6% 50, ,028 20,468 3, , % 4.1% 2.9% 4.0% 49, ,553 26,796 3, , % 3.6% 2.8% 3.5% 52, ,603 36,226 5, , % 3.0% 2.2% 2.8% 54, ,718 47,857 7, , % 2.4% 2.1% 2.5% 55, ,047 57,069 8, , % 1.8% 1.4% 2.0% 57, ,410 67,513 10, , % 1.4% 1.2% 1.7% 60, ,842 77,850 12, , % 1.4% 1.3% 1.6% 63, ,927 81,069 13, , % 1.0% 0.8% 1.2% 63, ,566 73,651 11, , % 0.9% 0.8% 1.1% 62, ,979 57,685 8, , % 0.8% 0.7% 0.9% 64, ,123 46,861 6, , % 0.7% 0.8% 0.9% 67, ,748 37,401 5, , % 0.6% 0.9% 0.9% 73,374 77,803 27,805 4, , % 0.4% 0.4% 0.6% 74,948 42,699 16,196 2,539 61, % 0.5% 0.5% 0.6% 67,408 26,395 8,125 1,284 35, % 0.5% 0.5% 0.6% 61,342 18,330 4, , % 0.5% 0.4% 0.8% 57,790 13,366 2, , % 0.3% 2.7% 0.8% 51,410 8,502 1, , % 0.9% 0.0% 0.8% 34,216 4, , % 0.0% 35.9% 0.8% 28,673 1, , % 0.0% 0.6% 24, % 0.0% 1.1% 21, Total 2.4% 2.0% 1.7% 2.3% 59,739 3,042, , ,538 3,904,604 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Chart 5a - Lapse Rates by Policy Size (by Number of Policies) <$100K $100K-249K $250K Policy Year 23

24 Table 5b - Lapse Rates and Exposure by Policy Size (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Single Policies Only) Average Exposure (Single Policies Only) Year <$100K $100K-249K $250K+ Composite Size ($) <$100K $100K-249K $250K+ Composite 1 7.6% 5.4% 3.5% 5.6% 64,211 1,886 1,963 1,540 5, % 5.6% 5.0% 5.9% 60,023 2,136 2,034 1,520 5, % 5.3% 4.3% 5.3% 54,057 2,489 2,056 1,415 5, % 4.8% 3.2% 4.5% 50,334 3,113 2,338 1,427 6, % 4.0% 2.8% 3.9% 49,928 4,084 3,038 1,727 8, % 3.6% 2.5% 3.4% 52,976 5,135 4,090 2,616 11, % 3.0% 1.9% 2.7% 54,794 6,450 5,401 3,552 15, % 2.3% 1.8% 2.3% 55,052 7,701 6,434 4,126 18, % 1.7% 1.2% 1.8% 57,591 8,580 7,658 5,031 21, % 1.4% 0.9% 1.4% 60,643 9,382 8,893 6,181 24, % 1.4% 1.3% 1.5% 63,243 9,324 9,303 6,772 25, % 1.0% 0.8% 1.1% 63,301 8,372 8,453 5,833 22, % 0.9% 0.7% 0.9% 62,132 6,775 6,601 4,289 17, % 0.8% 0.7% 0.8% 64,337 5,290 5,361 3,432 14, % 0.7% 0.5% 0.7% 67,874 4,043 4,273 2,872 11, % 0.6% 0.8% 0.8% 73,374 2,705 3,174 2,187 8, % 0.4% 0.3% 0.4% 74,948 1,492 1,841 1,271 4, % 0.5% 0.4% 0.5% 67, , % 0.5% 0.3% 0.5% 61, , % 0.4% 0.2% 0.5% 57, % 0.3% 1.7% 0.8% 51, % 0.8% 0.0% 0.7% 34, % 0.0% 30.7% 1.4% 28, % 0.0% #DIV/0! 0.5% 24, % 0.0% #DIV/0! 0.9% 21, Total 2.4% 2.0% 1.5% 2.0% 59,739 91,067 84,946 57, ,257 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Chart 5b - Lapse Rates by Policy Size (by Amount of Sum Assured) <$100K $100K-249K $250K Policy Year 24

25 Experience by Issue Age Table 6a - Lapse Rates and Exposure by Issue Age (by Number of Policies) Policy Lapse Rates (Single Policies Only) Year < Composite 1 9.6% 10.3% 8.7% 5.6% 3.9% 3.8% 7.4% 2 7.9% 8.8% 7.0% 5.6% 3.9% 3.4% 6.5% 3 6.7% 8.3% 6.2% 4.5% 2.8% 2.4% 5.5% 4 5.9% 6.8% 5.2% 3.7% 2.2% 1.6% 4.6% 5 5.2% 5.8% 4.4% 2.8% 1.8% 1.4% 4.0% 6 4.6% 5.2% 3.6% 2.3% 1.3% 1.0% 3.5% 7 3.8% 4.0% 2.8% 1.9% 1.1% 0.8% 2.8% 8 3.4% 3.3% 2.4% 1.5% 0.8% 0.6% 2.5% 9 2.9% 2.6% 1.9% 1.2% 0.7% 0.5% 2.0% % 2.1% 1.5% 1.0% 0.5% 0.5% 1.7% % 1.9% 1.5% 1.0% 0.6% 0.4% 1.6% % 1.4% 1.1% 0.7% 0.4% 0.4% 1.2% % 1.2% 0.9% 0.6% 0.4% 0.5% 1.1% % 1.0% 0.7% 0.5% 0.3% 0.4% 0.9% % 1.1% 0.7% 0.5% 0.4% 0.2% 0.9% % 1.0% 0.8% 0.6% 0.5% 0.5% 0.9% % 0.6% 0.5% 0.4% 0.4% 0.5% 0.6% % 0.6% 0.5% 0.6% 0.3% 0.5% 0.6% % 0.7% 0.6% 0.4% 0.2% 0.8% 0.6% % 0.8% 0.5% 0.6% 0.6% 1.2% 0.8% % 0.7% 1.0% 0.8% 0.5% 1.0% 0.8% % 1.0% 0.9% 0.1% 0.3% 0.0% 0.8% % 0.6% 1.0% 0.6% 0.7% 2.8% 0.8% % 0.9% 0.0% 0.0% 1.9% 0.0% 0.6% % 2.5% 0.0% 0.0% 5.1% 0.0% 1.1% Total 3.2% 2.7% 2.1% 1.6% 1.1% 1.1% 2.3% Exposure (Single Policies Only) 1 19,691 12,988 15,364 16,029 12,251 7,608 83, ,691 14,421 17,030 18,180 14,053 8,425 94, ,525 17,018 19,772 20,246 16,191 9, , ,961 21,600 24,727 24,414 19,843 11, , ,195 30,425 32,969 30,050 23,862 12, , ,446 41,048 42,920 36,809 27,914 14, , ,774 54,745 55,314 45,095 32,812 16, , ,847 68,657 66,415 51,633 36,194 16, , ,663 81,055 76,479 56,387 38,011 16, , ,762 93,896 86,403 60,253 38,958 15, , ,980 97,255 89,127 60,093 37,690 14, , ,440 90,086 81,665 53,705 33,216 11, , ,700 75,000 66,382 42,171 25,759 8, , ,718 62,338 53,608 31,635 19,035 5, , ,754 50,341 42,311 23,654 13,997 3, , ,865 36,370 30,215 16,239 9,843 2, , ,868 21,141 17,763 9,791 6,455 1,416 61, ,704 11,969 10,012 5,844 4, , ,801 7,471 6,381 4,088 3, , ,313 4,989 4,324 3,070 2, , ,826 2,489 2,039 1, , , ,090 1, , , Total 951, , , , , ,541 3,904,604 25

26 12% Chart 6a - Lapse Rates by Issue Age (by Number of Policies) 10% 8% 6% 4% % 0% Policy Year 26

27 Table 6b - Lapse Rates and Exposure by Issue Age (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Single Policies Only) Year < Composite 1 7.8% 8.1% 5.7% 4.0% 3.4% 4.2% 5.6% 2 7.8% 8.1% 5.9% 5.2% 4.3% 2.6% 5.9% 3 7.1% 7.5% 5.1% 4.1% 3.5% 3.2% 5.3% 4 6.0% 6.2% 4.3% 4.0% 2.5% 1.7% 4.5% 5 5.2% 5.4% 3.9% 2.5% 2.1% 1.8% 3.9% 6 4.9% 4.6% 3.2% 2.4% 1.7% 1.3% 3.4% 7 3.8% 3.5% 2.5% 2.1% 1.6% 0.7% 2.7% 8 3.5% 2.9% 2.1% 1.8% 1.2% 0.8% 2.3% 9 2.7% 2.2% 1.7% 1.2% 0.8% 0.5% 1.8% % 1.8% 1.3% 1.0% 0.5% 0.4% 1.4% % 1.7% 1.5% 1.1% 0.6% 0.3% 1.5% % 1.2% 1.0% 0.9% 0.4% 0.2% 1.1% % 1.0% 0.8% 0.8% 0.5% 0.3% 0.9% % 0.9% 0.7% 0.7% 0.3% 0.2% 0.8% % 0.9% 0.6% 0.5% 0.4% 0.1% 0.7% % 0.8% 0.6% 0.8% 0.6% 0.3% 0.8% % 0.5% 0.5% 0.2% 0.2% 0.1% 0.4% % 0.5% 0.4% 0.8% 0.1% 0.1% 0.5% % 0.6% 0.4% 0.6% 0.1% 0.4% 0.5% % 0.6% 0.3% 0.5% 0.7% 0.2% 0.5% % 0.4% 1.3% 1.7% 0.2% 0.2% 0.8% % 0.6% 0.9% 0.0% 0.2% 0.0% 0.7% % 2.3% 3.0% 0.2% 0.3% 0.6% 1.4% % 0.4% 0.0% 0.0% 1.5% 0.0% 0.5% % 2.7% 0.0% 0.0% 2.3% 0.0% 0.9% Total 3.1% 2.2% 1.8% 1.6% 1.2% 1.2% 2.0% Exposure (Single Policies Only) ,065 1,247 1, , ,119 1,304 1, , ,215 1,380 1, , ,043 1,464 1,631 1, , ,432 2,043 2,180 1,522 1, , ,879 2,845 3,051 2,037 1, , ,406 3,894 4,021 2,644 1, , ,856 4,876 4,779 3,041 1, , ,181 6,034 5,720 3,448 1, , ,467 7,329 6,748 3,887 2, , ,371 7,786 7,206 4,020 2, , ,888 7,240 6,486 3,475 1, , ,222 5,943 5,118 2,527 1, , ,642 5,089 4,212 1, , ,152 4,188 3,440 1, , ,080 2,567 1, , ,775 1, , , , Total 31,070 69,019 64,377 36,805 21,593 10, ,257 27

28 9% Chart 6b - Lapse Rates by Issue Age (by Amount of Sum Assured) 8% 7% 6% 5% 4% 3% % 1% 0% Policy Year 28

29 Experience by Premium Frequency Table 7a - Lapse Rates and Exposure by Premium Frequency (by Number of Policies) Policy Lapse Rates (Single Policies Only) Exposure (Single Policies Only) Year Non-Monthly Monthly Composite Non-Monthly Monthly Composite 1 6.8% 7.6% 7.4% 17,597 66,333 83, % 5.9% 6.5% 20,126 74,674 94, % 5.1% 5.5% 21,593 88, , % 4.4% 4.6% 25, , , % 3.7% 4.0% 33, , , % 3.3% 3.5% 43, , , % 2.7% 2.8% 56, , , % 2.3% 2.5% 69, , , % 1.8% 2.0% 78, , , % 1.5% 1.7% 86, , , % 1.4% 1.6% 88, , , % 1.0% 1.2% 81, , , % 0.9% 1.1% 66, , , % 0.8% 0.9% 51, , , % 0.8% 0.9% 38, , , % 0.8% 0.9% 25,979 83, , % 0.5% 0.6% 15,849 45,585 61, % 0.4% 0.6% 10,714 25,091 35, % 0.4% 0.6% 8,219 15,535 23, % 0.4% 0.8% 6,277 10,497 16, % 0.5% 0.8% 3,956 6,320 10, % 0.4% 0.8% 1,842 2,831 4, % 0.3% 0.8% 696 1,034 1, % 0.0% 0.6% % 0.0% 1.1% Total 2.8% 2.1% 2.3% 854,495 3,050,108 3,904,604 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Chart 7a - Lapse Rates by Premium Frequency (by Number of Policies) Policy Year Non-Monthly Monthly 29

30 Table 7b - Lapse Rates and Exposure by Premium Frequency (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Single Policies Only) Exposure (Single Policies Only) Year Non-Monthly Monthly Composite Non-Monthly Monthly Composite 1 4.2% 6.2% 5.6% 1,659 3,730 5, % 5.5% 5.9% 1,751 3,939 5, % 4.9% 5.3% 1,616 4,343 5, % 4.2% 4.5% 1,700 5,178 6, % 3.6% 3.9% 2,098 6,751 8, % 3.2% 3.4% 3,039 8,803 11, % 2.5% 2.7% 4,066 11,337 15, % 2.2% 2.3% 4,786 13,475 18, % 1.6% 1.8% 5,393 15,877 21, % 1.3% 1.4% 5,862 18,593 24, % 1.3% 1.5% 5,938 19,462 25, % 0.9% 1.1% 5,215 17,443 22, % 0.8% 0.9% 4,125 13,539 17, % 0.7% 0.8% 3,204 10,879 14, % 0.6% 0.7% 2,434 8,754 11, % 0.7% 0.8% 1,719 6,347 8, % 0.4% 0.4% 1,078 3,527 4, % 0.5% 0.5% 679 1,735 2, % 0.4% 0.5% , % 0.5% 0.5% % 0.9% 0.8% % 0.5% 0.7% % 0.9% 1.4% % 0.0% 0.5% % 0.0% 0.9% Total 2.6% 1.8% 2.0% 57, , ,257 8% 7% 6% 5% 4% 3% 2% 1% 0% Chart 7b - Lapse Rates by Premium Frequency (by Amount of Sum Assured) Policy Year Non-Monthly Monthly 30

31 Experience by Smoking Status and Issue Age Policy Table 8a NS - Lapse Rates and Exposure by Issue Age (by Number of Policies) Lapse Rates (Monthly Premium Mode, Single Policies Only) Year < Composite 1 6.1% 6.4% 5.7% 4.3% 3.4% 3.9% 5.0% 2 5.8% 6.1% 5.2% 4.1% 3.1% 2.4% 4.5% 3 6.3% 6.2% 4.9% 3.4% 2.1% 2.0% 4.2% 4 5.8% 5.6% 4.0% 2.7% 1.8% 1.3% 3.6% 5 5.3% 4.8% 3.5% 2.1% 1.3% 1.1% 3.2% 6 5.1% 4.4% 2.9% 1.8% 1.0% 0.8% 2.9% 7 4.0% 3.5% 2.4% 1.4% 0.8% 0.6% 2.3% 8 3.6% 2.8% 1.9% 1.3% 0.6% 0.4% 2.0% 9 3.0% 2.2% 1.5% 0.9% 0.5% 0.3% 1.6% % 1.7% 1.2% 0.8% 0.4% 0.3% 1.3% % 1.5% 1.2% 0.7% 0.5% 0.3% 1.2% % 1.2% 0.8% 0.5% 0.3% 0.3% 0.9% % 0.9% 0.6% 0.4% 0.3% 0.2% 0.8% % 0.8% 0.5% 0.4% 0.3% 0.2% 0.7% % 0.8% 0.5% 0.5% 0.3% 0.2% 0.6% % 0.7% 0.6% 0.4% 0.4% 0.3% 0.6% % 0.5% 0.5% 0.2% 0.2% 0.1% 0.4% % 0.3% 0.3% 0.3% 0.1% 0.2% 0.3% % 0.4% 0.3% 0.4% 0.1% 0.0% 0.4% % 0.5% 0.2% 0.2% 0.3% 0.6% 0.4% % 0.6% 0.9% 0.4% 0.0% 1.0% 0.6% % 0.5% 0.5% 0.2% 0.0% 0.0% 0.4% % 0.9% 0.8% 0.0% 0.0% 0.0% 0.3% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% #DIV/0! 0.0% Total 3.2% 2.1% 1.6% 1.2% 0.8% 0.8% 1.7% Exposure (Monthly Premium Mode, Single Policies Only) 1 5,166 7,478 8,125 8,262 6,981 5,164 41, ,790 8,459 9,159 9,389 8,042 5,657 46, ,072 9,965 10,760 10,971 9,569 6,312 54, ,069 12,572 13,560 13,567 11,881 7,290 67, ,343 17,334 18,080 16,845 14,269 8,293 87, ,594 22,978 23,426 20,697 16,428 9, , ,538 30,237 30,169 25,191 18,877 10, , ,939 37,667 36,227 28,539 20,346 10, , ,725 44,447 42,134 31,033 21,001 10, , ,058 51,532 48,215 33,376 21,495 10, , ,667 53,573 50,129 33,206 20,726 9, , ,991 49,678 45,898 29,221 18,166 7, , ,050 41,338 36,982 22,293 13,830 5, , ,747 35,180 30,262 16,443 10,052 3, , ,332 29,218 24,392 12,305 7,422 2,442 84, ,891 21,903 17,900 8,548 5,304 1,554 60, ,284 12,743 10,389 5,106 3, , ,291 6,863 5,515 2,893 2, , ,884 3,198 1,913 1, , ,362 2,011 1,388 1, , ,237 1, , , Total 240, , , , , ,031 1,892,006 31

32 Table 8b NS - Lapse Rates and Exposure by Issue Age (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Monthly Premium Mode, Single Policies Only) Year < Composite 1 4.9% 6.6% 4.7% 3.8% 3.1% 5.0% 4.8% 2 5.2% 6.1% 5.2% 4.3% 3.3% 1.8% 4.5% 3 6.6% 5.8% 4.4% 2.9% 2.3% 2.7% 4.2% 4 5.3% 5.4% 3.3% 3.1% 2.2% 1.4% 3.6% 5 5.2% 4.5% 3.3% 1.9% 1.5% 1.7% 3.2% 6 5.3% 3.9% 2.7% 1.9% 1.2% 1.7% 2.9% 7 4.0% 3.0% 2.1% 1.7% 1.1% 0.6% 2.3% 8 3.4% 2.5% 1.7% 1.5% 1.0% 0.6% 1.9% 9 2.6% 1.8% 1.2% 0.8% 0.7% 0.2% 1.4% % 1.4% 1.0% 0.8% 0.5% 0.4% 1.1% % 1.3% 1.1% 0.9% 0.7% 0.3% 1.1% % 0.9% 0.8% 0.6% 0.2% 0.2% 0.8% % 0.8% 0.5% 0.6% 0.4% 0.1% 0.7% % 0.7% 0.5% 0.5% 0.2% 0.2% 0.6% % 0.7% 0.5% 0.4% 0.3% 0.1% 0.5% % 0.5% 0.5% 0.8% 0.8% 0.2% 0.6% % 0.4% 0.5% 0.1% 0.3% 0.0% 0.4% % 0.2% 0.3% 1.0% 0.0% 0.0% 0.3% % 0.3% 0.2% 0.7% 0.1% 0.0% 0.4% % 0.3% 0.2% 0.5% 1.1% 0.1% 0.4% % 0.3% 2.5% 1.0% 0.0% 0.2% 1.1% % 0.2% 0.7% 0.1% 0.0% 0.0% 0.5% % 0.9% 5.3% 0.0% 0.0% 0.0% 1.3% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% #DIV/0! 0.0% Total 2.8% 1.8% 1.4% 1.2% 0.9% 1.1% 1.6% Exposure (Monthly Premium Mode, Single Policies Only) , , , , ,281 1, , ,727 1,765 1, , ,318 2,340 1, , ,056 2,885 2,801 1, , ,173 3,610 3,450 2,069 1, , ,272 4,463 4,237 2,430 1, , ,230 4,793 4,630 2,580 1, , ,053 4,463 4,214 2,240 1, , ,636 3,302 1, , ,199 2,766 1, , ,721 2, , ,078 1, , , , , Total 11,898 42,672 39,908 22,297 12,843 6, ,223 32

33 Table 8c SM - Lapse Rates and Exposure by Issue Age (by Number of Policies) Policy Lapse Rates (Monthly Premium Mode, Single Policies Only) Year < Composite % 17.3% 14.4% 9.8% 6.3% 6.0% 12.5% 2 9.3% 11.9% 9.0% 7.5% 4.8% 4.6% 8.8% 3 8.0% 10.4% 7.3% 5.5% 3.4% 2.6% 7.2% 4 6.7% 7.8% 6.3% 4.2% 2.4% 2.2% 5.8% 5 6.0% 6.4% 4.5% 3.0% 1.8% 1.6% 4.6% 6 5.5% 6.0% 3.9% 2.2% 1.2% 0.7% 4.1% 7 4.3% 4.5% 3.1% 2.1% 1.0% 0.7% 3.2% 8 3.7% 3.7% 2.7% 1.3% 0.7% 0.6% 2.7% 9 3.1% 2.6% 1.9% 1.2% 0.5% 0.2% 2.1% % 2.3% 1.7% 0.9% 0.4% 0.5% 1.7% % 2.1% 1.4% 0.8% 0.4% 0.7% 1.6% % 1.5% 1.3% 0.7% 0.2% 0.5% 1.2% % 1.4% 0.9% 0.5% 0.3% 0.6% 1.1% % 1.1% 0.7% 0.5% 0.1% 0.0% 0.9% % 1.2% 0.7% 0.4% 0.3% 0.0% 0.9% % 1.6% 0.8% 0.6% 0.5% 1.1% 1.1% % 0.9% 0.4% 0.6% 0.3% 0.0% 0.7% % 1.3% 0.3% 0.9% 0.0% 2.0% 0.8% % 0.7% 0.6% 0.4% 0.3% 0.0% 0.6% % 1.0% 0.4% 0.5% 0.0% 0.0% 0.6% % 0.2% 0.7% 0.0% 0.0% 0.0% 0.3% % 0.4% 0.6% 0.0% 0.0% 0.0% 0.3% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% 0.0% Total 4.3% 3.2% 2.6% 1.9% 1.1% 1.2% 2.8% Exposure (Monthly Premium Mode, Single Policies Only) 1 8,043 3,518 4,220 3,455 1, , ,623 3,771 4,508 3,759 1, , ,498 4,587 5,435 4,395 2, , ,535 5,864 6,910 5,514 2,921 1,076 29, ,895 8,497 9,352 6,865 3,568 1,265 37, ,451 11,472 12,014 8,190 4,165 1,465 45, ,822 15,193 15,164 9,828 5,010 1,704 56, ,223 18,779 17,769 10,988 5,551 1,744 66, ,039 21,728 19,786 11,746 5,783 1,680 72, ,865 24,720 21,619 12,111 5,870 1,550 78, ,485 24,936 21,452 11,708 5,514 1,339 77, ,814 22,491 19,084 10,345 4,826 1,059 68, ,519 18,219 15,055 8,076 3, , ,203 14,653 11,610 5,987 2, , ,309 11,301 8,657 4,301 1, , ,346 7,562 5,673 2,756 1, , ,936 3,029 1, , ,097 1, , ,290 1, , , , Total 139, , , ,718 60,500 17, ,455 33

34 Table 8d SM - Lapse Rates and Exposure by Issue Age (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Monthly Premium Mode, Single Policies Only) Year < Composite % 14.6% 12.5% 8.3% 6.4% 6.4% 11.5% 2 9.7% 11.5% 8.7% 7.0% 5.6% 2.7% 8.9% 3 8.4% 11.0% 6.7% 5.5% 4.3% 2.6% 7.7% 4 7.6% 7.7% 5.9% 4.0% 3.8% 1.7% 6.1% 5 6.3% 6.1% 4.1% 2.8% 3.2% 3.5% 4.8% 6 6.1% 5.6% 3.7% 2.4% 1.6% 1.2% 4.3% 7 4.5% 4.2% 3.0% 2.2% 1.2% 0.9% 3.4% 8 4.4% 3.4% 2.5% 1.3% 1.1% 3.0% 2.8% 9 3.4% 2.4% 1.9% 1.2% 1.0% 0.1% 2.1% % 2.1% 1.5% 1.0% 0.5% 1.4% 1.7% % 2.0% 1.4% 1.2% 0.5% 0.6% 1.7% % 1.5% 1.3% 0.7% 0.2% 0.5% 1.3% % 1.2% 0.9% 1.2% 0.8% 0.4% 1.1% % 0.9% 0.8% 0.7% 0.1% 0.0% 0.9% % 1.1% 0.7% 0.3% 1.0% 0.0% 0.9% % 1.5% 0.8% 1.3% 1.3% 2.1% 1.3% % 0.8% 0.5% 0.5% 0.2% 0.0% 0.6% % 1.7% 0.5% 2.0% 0.0% 0.3% 1.2% % 0.6% 0.4% 0.6% 0.2% 0.0% 0.5% % 1.2% 0.3% 1.3% 0.0% 0.0% 0.8% % 0.1% 0.5% 0.0% 0.0% 0.0% 0.4% % 0.4% 0.8% 0.0% 0.0% 0.0% 0.4% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% 0.0% 0.0% % 0.0% 0.0% 0.0% 0.0% 0.0% Total 4.2% 2.9% 2.3% 2.0% 1.6% 1.8% 2.7% Exposure (Monthly Premium Mode, Single Policies Only) , , , , , , , ,323 1, , ,366 1, , , , , , , , Total 4,351 12,046 9,419 3,974 1, ,769 34

35 Experience by Timing of Cash Value (CV) Availability Table 9a - Lapse Rates and Exposure by Issue Age (by Number of Policies) Policy Lapse Rates (Single Policies Only) Year Available CV CV in next 5 No CV or CV in Years 5+ years Composite 1 8.9% 7.3% 7.4% 2 7.2% 6.4% 6.5% 3 5.8% 5.4% 5.5% 4 4.0% 6.6% 4.5% 4.6% 5 4.5% 2.2% 3.8% 4.0% 6 4.2% 1.9% 3.2% 3.5% 7 3.4% 2.8% 2.6% 2.8% 8 3.0% 3.3% 2.1% 2.5% 9 2.4% 2.7% 1.7% 2.0% % 1.9% 1.4% 1.7% % 5.9% 1.4% 1.6% % 8.8% 1.0% 1.2% % 0.0% 0.9% 1.1% % 0.0% 0.8% 0.9% % 0.0% 0.7% 0.9% % 0.7% 0.7% 0.9% % 1.8% 0.5% 0.6% % 0.9% 0.6% 0.6% % 0.0% 0.7% 0.6% % 0.0% 0.8% 0.8% % 0.8% 0.8% % 0.8% 0.8% % 0.8% % 0.6% % 1.1% Total 2.2% 5.9% 2.2% 2.3% Exposure (Single Policies Only) 1-7,424 76,507 83, ,382 82,417 94, ,099 91, , ,619 12, , , , , , ,662 1, , , ,916 1, , , ,497 1, , , ,710 2, , , ,522 1, , , , , , , , , , , , , , , , , , ,437 1,372 85, , , ,076 61, , ,732 35, , ,968 23, , ,384 16, ,805 10, ,623 4, ,730 1, Total 1,296,019 64,949 2,543,635 3,904,604 35

36 8% Chart 9a - Lapse Rates by Timing of Cash Value Availability (by Number of Policies) 7% 6% 5% 4% 3% Available CV No CV or CV in 5+ years 2% 1% 0% Policy Year 36

37 Table 9b - Lapse Rates and Exposure by Issue Age (by Amount of Sum Assured ($000,000)) Policy Lapse Rates (Single Policies Only) Year Available CV CV in next 5 No CV or CV in Years 5+ years Composite 1 8.9% 5.5% 5.6% 2 8.3% 5.7% 5.9% 3 6.6% 5.2% 5.3% 4 4.3% 7.0% 4.3% 4.5% 5 4.6% 2.2% 3.7% 3.9% 6 4.4% 1.1% 3.2% 3.4% 7 3.6% 1.4% 2.5% 2.7% 8 3.2% 2.4% 2.1% 2.3% 9 2.5% 1.8% 1.5% 1.8% % 1.5% 1.3% 1.4% % 5.3% 1.4% 1.5% % 7.4% 0.9% 1.1% % 0.0% 0.9% 0.9% % 0.0% 0.8% 0.8% % 0.0% 0.7% 0.7% % 0.5% 0.7% 0.8% % 1.1% 0.4% 0.4% % 0.8% 0.5% 0.5% % 0.0% 0.5% 0.5% % 0.0% 0.5% 0.5% % 0.9% 0.8% % 0.7% 0.7% % 1.4% % 0.5% % 0.9% Total 2.2% 5.2% 1.9% 2.0% Exposure (Single Policies Only) ,194 5, ,363 5, ,454 5, ,066 6, , ,418 8, , ,644 11, , ,164 15, , ,952 18, , ,141 21, , ,510 24, , ,412 25, , ,369 22, , ,437 17, , ,990 14, , ,080 11, ,952 8, ,194 4, ,136 2, ,267 1, Total 44,671 2, , ,257 37

38 7% Chart 9b - Lapse Rates by Timing of Cash Value Availability (by Amount of Sum Assured) 6% 5% 4% Available CV No CV or CV in 5+ years 3% 2% 1% 0% Policy Year 38

39 Scope APPENDIX We asked the contributing companies to provide policy records for Term-to-100 and Level Term-to-75 or similar plans with the following characteristics: 1. premiums payable for life or limited pay plans; 2. plans with or without cash values; 3. plans that have guaranteed premiums or adjustable premiums; and 4. plans that have guaranteed benefits or adjustable benefits. Adjustable records and riders were excluded from the study. There were a few companies with adjustable premium or benefits policies. The majority of the contributors provided data for base policies only. Riders and adjustable policies represent 3.5% of the initial exposure by policy count. Policy Codes that were included in the study are as follows: Active, Death, Lapsed, and Surrendered; and All other policy codes were excluded. Methodology Definition of Active Exposure Base: We conducted a calendar year study for the study period between January 1, 1999 and December 31, The reasons for conducting a calendar year study as opposed to a policy year study are as follows: 1. Some companies provided experience by calendar year only; and 2. The calendar year study generates slightly more exposure. The exposure provided by each company was determined in the following manner: Exposure Start Date = maximum of (January 1, 1999, Company Purge Date); and Exposure End Date = minimum of (December 31, 2004, Company Extract Date). No further adjustment was made to account for late reported lapses given the time that had elapsed between December 31, 2004 and the date the data were provided to us for the study. 39