The life insurance market is characterized by widely disparate prices for a largely homogeneous product. To gain insight on the factors behind life insurance price heterogeneity, this study examines relationships between insurance company characteristics and life insurance policy performance. Significant variables that help explain variation in policy performance include: lapse rate, insurer expenses, and investment yield. Variables that are not significantly related to policy performance include: insurer size, Best rating, gain to income, organizational form, and change in product mix. The study's empirical results indicate that insurers with lower lapse rates can provide cash value products with superior performance, but results also indicate that insurers with higher lapse rates are able to pass along these costs. The study's findings suggest that the toll levied by high lapse rates is significant, that policyowners would benefit from reduced lapsation, and that the public policy implications of the policy lapse-performance relationship are important.