Question

How is the withdrawal rate related to persistency?

a.

It is unrelated to persistency

b.

It is inversely proportional to persistency

c.

It is directly proportional to persistency

d.

It is equal to the persistency ratio

Posted under IC 92 Actuarial Aspects of Product Development

Answer: (b).It is inversely proportional to persistency Explanation:The withdrawal rate, which represents the percentage of insurance policies withdrawn by policyholders, is inversely proportional to persistency. As persistency decreases, withdrawal rates increase, and vice versa.

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