Gross-premium reserve — 15-year term, 12,000 policies
projectPolicyLiability — decrements projected, then discounted
Reserve
$30.81m
vs base
+$0
at 4.2%, base lapse
PV benefits
$46.52m
PV premiums
$19.10m
Lapses cut both ways on a term book
Raise lapses and the reserve falls — fewer policies to pay a death benefit on. But premium income falls too, and on a book where premiums are still funding future claims the second effect fights the first. That is why lapse is a valuation assumption rather than an administrative statistic, and why moving it here moves the answer in a direction you have to look at rather than predict.
Where the survivors go
| Year | In force | Deaths | Lapses |
|---|---|---|---|
| 1 | 12,000 | 11 | 1,319 |
| 5 | 8,278 | 13 | 496 |
| 10 | 6,273 | 19 | 281 |
| 15 | 5,034 | 32 | 150 |
Stated limit
Deaths are taken before lapses within each year, which is a convention rather than a fact about the world. On a book with this much decrement the ordering is worth a fraction of a percent — small, and the kind of small that is only small because somebody checked.