Evaluating Policy Lapse Behavior on Life Insurance Policyholders in Digos City

Policy lapse behavior on life insurance threatens the financial stability of insurers and compromises the security of policyholders. Many policyholders discontinue their policies due to demographic and behavioral factors, leading to financial losses for insurers and reduced protection for individuals. Policy lapses not only affect the financial sustainability of insurance providers but also undermine the long-term financial planning and security of families who depend on these policies for protection. This study investigates the determinants of policy lapse behavior among life insurance policyholders in Digos City using a quantitative descriptive-comparative approach. Data from 152 respondents were analyzed through descriptive statistics and one-way ANOVA to assess the impact of demographic factors on policy lapse tendencies. The findings show that gender, occupation, age and income have minimal influence on lapse behavior. However, educational backgrounds play a more significant role, those with lower educational attainment exhibiting higher lapse rates. Respondents with vocational or undergraduate education demonstrated a higher likelihood of lapsing, emphasizing the role of education in policy lapse decisions. The results indicated that policyholders with lower educational attainment are more prone to policy lapses due to financial constraints, lack of awareness, and varying risk perceptions. The study concludes that targeted educational interventions can enhance financial literacy and promote long-term policy retention. To mitigate policy lapses, insurers should focus on improving awareness of the benefits of maintaining life insurance and provide regular policy reminders. Strengthening financial education and offering personalized communication strategies can help reduce lapse rates and improve financial security for policyholders while ensuring the sustainability of the insurance industry.