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Group Term Lapse Rates Converge

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The voluntary, employee-paid group term life market continues to grow faster than the traditional, employer-paid group term life market.

In-force premium revenue grew 3% for traditional group term life in 2005, to about $15 billion, while in-force premium revenue grew 9% for voluntary group term life coverage, to $1.4 billion, according to researchers at Gen Re LifeHealth, Stamford, Conn., and its sister company, JHA, Portland, Maine.

Premium from new GTL sales rose only 2%, to $1.8 billion, while premium from new VGTL sales rose 10%, to $210 million.

But the researchers found that lapse rates for voluntary coverage rose to 15%, from 12%, as lapse rates for traditional group coverage fell to 15%, from 17%.