Factors Affecting Lapsation of Life Insurance Policies in Sri Lanka: Special Reference to Matara District

Long-term insurance companies operate in Sri Lanka's insurance industry, offering various kinds of insurance products. Customers have a vast range of choices, and they have become more powerful decision-makers in the market. Also, this study will help to solve the existing problems in life insurance plans and create high recognition in the field. So that, it is more important to identify the key factors affect the lapsation of life insurance policies. To achieve this goal, questionnaires were distributed among 97 employees who are life insurance policyholders in Matara District. Data was collected through primary data sources. To analyze the collected data, an SPSS statistical application is to be used, and through those, descriptive statistics, Pearson’s coefficient of correlation analysis, and regression analysis are to be undertaken to test the hypothesis of the study. Throughout the analysis it is identified that there is a significant impact between Mis Selling of Policies, Poor Customer Relationship Management and Financial Burden for the Policyholders on Lapsation of Life Insurance Policies. The insurance companies have to find the reasons for the lapsation of life insurance policies and take remedial actions to mitigate. In this study, the researcher has considered three major factors that affect the lapsation of life insurance policies. Researchers have identified Poor Customer Relationship Management as highly affecting the lapsation policies in the life insurance industry. Therefore, insurance companies have to give more attention to customer relationship management.