Life insurers continue to face meaningful challenges related to policy lapses, particularly when coverage terminates early or repeatedly. These behaviors carry real financial consequences, from unrecovered acquisition costs to increased pressure on pricing and profitability, and they raise important questions about policyholder behavior over time.

To better understand these patterns, MIB and RGA analyzed anonymized policy data from the MIB In Force Data Vault, drawing on a uniquely broad, multi‑carrier view of lapse activity across the industry. 

Key findings from that analysis are highlighted below, with additional detail available in the full study.

Key Findings

1) Lapses are most common in the earliest policy years.

Lapse rates are highest early in the policy lifecycle, with policy year 1 (early) lapse rates exceeding 9% before declining over time. Early policy years are especially critical for insurers, as elevated lapse rates during this period have a direct impact on the recovery of acquisition expenses.

2) Face amount plays a significant role in lapse behavior.

Across both term and permanent products, lower face amount policies—particularly those under $50,000—experience materially higher lapse rates. This is especially pronounced for early lapses, which occur disproportionately more often at lower face amounts than overall lapse behavior alone would suggest.

However, the data also reveals upticks in multiple lapse propensity at higher face amounts ($2M+), underscoring that repeat lapse behavior spans both ends of the face amount spectrum.

3) Term products have substantially higher lapse rates than permanent products.

Term products consistently exhibit higher multiple lapse propensity, early lapse, and overall lapse rates than permanent products, most notably at lower face amounts in the $50K–$99K band and generally narrowing as face amounts increase.

4) Age and face amount interact in important ways.

Issue age and face amount together reveal more complex lapse dynamics. For most age groups, multiple lapse propensity rates are highest at lower face amounts and decline as face amount increases, with the exception of an uptick at face amounts above $2M.

However, a striking pattern emerges for ages 60 and above, where multiple lapse propensity increases for policies above $100K, with policies above $2 million seeing the highest multiple lapse propensity.

5) Multi-policy behavior signals elevated lapse risk.

Individuals holding more than one policy show 30%–40% higher lapse rates compared to single-policy holders, indicating distinct behavioral characteristics.

Bringing it all together

Taken together, these findings show that lapses are often behavioral in origin, repeat‑driven, and multi‑carrier in nature. 

Early lapses and repeated terminations place real financial strain on insurers, particularly when acquisition and underwriting costs have not yet been recovered.

Because the MIB In Force Data Vault captures policy activity across participating carriers, it provides visibility into lapse behavior that may span multiple insurers—patterns that are difficult to identify using company-specific experience alone. This broader, industry-wide perspective helps surface repeat lapse activity and multi-policy behavior that might otherwise remain hidden, enabling insurers to better understand how lapse risk varies by product type, face amount, issue age, and policy ownership patterns.

Turning insight into action with MIB Total Line

The MIB Total Line Service, Powered by the In Force Data Vault, this enables insurers to apply these insights directly within underwriting and risk assessment. Subscribers receive in-force and terminated policy data for an applicant, delivered through Total Line Codes and Alerts at the time of underwriting, providing a clearer view of prior insurance activity.

This information helps underwriters identify repeat lapsation, recognize elevated early-duration lapse risks, refine assumptions across key segments, and reduce preventable acquisition and underwriting costs.

Moving forward—together

As participation in the MIB In Force Data Vault continues to grow, industry collaboration and data sharing will further strengthen insight into lapse behavior. By contributing data to the Data Vault, carriers help build a more informed and resilient life insurance industry. Additionally, by subscribing to the MIB Total Line Service, insurers gain actionable intelligence to support smarter underwriting and risk management decisions.

Contact your MIB Account Rep to learn more.