Abstract We model surrender rates with a few explanatory variables such as the di erence between reference marketrates and product crediting rates, the policy age since the contract was issued, unemployment rates, economygrowth rates, and seasonal e ects using logit function. We investigate the policy holder surrender behav-iors of US single premium deferred annuities(SPDA) and Korean interest indexed annuities under extreme nancial conditions. Keywords: Surrender/Lapse rate model, extreme nancial conditions, surrender rate changes. 1. Introduction Modeling appropriate interest rate sensitive surrender/lapse rates is essential in managing the assetsand liabilities of insurance companies. Even though there are a few research papers on the interestsensitivity of the cash ows, the analysis is focused usually on asset sides. For example, in Pesando(1974), the cash ow analysis considers the prepayment rate impacts only. But we have to mentionthat the interest sensitivity of cash ows through surrender rate uctuations is a kind of \dualproblem through the prepayment rate uctuations. So it is important to consider surrender rateimpacts on cash ow analysis with proper surrender rate models.There are many factors a ecting surrender/lapse rates such as the di erence between referencemarket rate and policy crediting rate, seasonal e ect, age and gender of clients, economy growthrate, foreign exchange rate, ination rate, policy age since issue date, and unemployment rate. Kim(2005a) presents surrender rate models with explanatory variables such as the di erence betweenreference rates and crediting rates, policy age since issue, nancial crises, unemployment rates,economy growth rates and seasonal e ects. He uses the logit function and the complementary log-log function in modeling surrender rates and shows that the logit model and the complementarylog-log model are generally better than the existing surrender rate models such as the arctangentmodel. He also shows that the surrender rate models are di erent according to insurance policytypes and nds the proper surrender rate models for the four insurance groups: protection plans,education plans, endowment and annuities.