Section 230-RICR-20-45-8.3 - DefinitionsA. "Morbidity" means the risk that a policyholder will become ill, sick or contract a disease during the effective dates of the policy.B. "Mortality" means the risk that a policyholder will die during the effective dates of the policy.C. "Lapse" means the risk that a policy will voluntarily terminate prior to the recoupment of a statutory surplus strain experienced at issue of the policy.D. "Credit quality" means the risk that invested assets supporting the reinsured business will decrease in value. The main hazards are that assets will default or that there will be a decrease in earning power. It excludes market value declines due to changes in the interest rate.E. "Reinvestment" means the risk that interest rates will fall and funds reinvested (coupon payments or monies received upon asset maturity or call) will therefore earn less than expected. If asset durations are less than liability durations, the mismatch will increase.F. "Disintermediation" means the risk that interest rates rise and policy loans and surrenders increase or maturing contracts do not renew at anticipated rates of renewal. If asset durations are greater than the liability durations, the mismatch will increase. Policyholders will move their funds into new products offering higher rates. The company may have to sell assets at a loss to provide for these withdrawals230 R.I. Code R. 230-RICR-20-45-8.3