Discussion Of Several Questions In The Annuity's Pricing

There are many factors that influence annuity's pricing, but survival rate, interest rate and causing because of people's selfish—adverse selection are the main factors of them. Among the three factors, survival rate and interest rate determine the pure premium of the annuity; adverse selection is ignored for the decision of additional expense's proportion. This text make a detail analysis of the three respects and discuss in the improving of the three respects in annuity's pricing for the insurers.The first part of the text introduce the difference between life insurance and annuity, so as their conceptions which make us have a wholly understanding to annuity. Then compare the research of annuity in China and foreign countries which also make us have a certain knowledge of annuity-pricing's history.Second part discusses the most important factor that influence theannuity's pricing------Survival rate. Survival rate determine the purepremium of annuity. Determine the survival rate through mortality table had made the insurers facing a severe risk in survival rate. In the text, the writer introduced the knowledge of credibility theory to lighten the risk which was untouched in life-insurance but was widely used in general insurance.The third part discusses the compensation of adverse selection. Till now, almost every insurance companies haven't given a clear proportion of it in premium. In the text, we utilized the relevant relations between people's selfish psychology and purchasing quantity to turn from quality to quantity, which we can determine the proportion for adverse selection in premium.Annuity is a kind of long term insurance. The interest rate has a very important position in the decision of the pure premium. We discussed emphatically in it in the fourth part. Facing several change and market-trend of the interest rate, the insurers feel very helpless. In the text, we suppose interest rate obey the terms of AR (p), and set up a unconditional AR (p ) interest rate annuity model. Through the model, it is more flexible for the interest rate in the annuity's pricing. At the same time prevent from the unordered frequent change to bring a fluctuation in insurers' benefit.At the end of the article, the writer announces again that the number of effect factors to annuity's premium is very large. In order to make a reasonable pricing model, we must make more research in many relative fields.