Life Insurance Embedded Value And Its Application

The conception of embedded value roots from how to estimate the outstanding achievement of the life insurance company scientifically. The management aim of the life insurance company is to create deport value for dormantpartners and clients. As for the long term of the life insurance product, and the characteristic of the earning compensation is prior to the cost, there is not a uniform standard to weight the management production of the life insurance company. Neither the current insurance premium nor the profit has some shortage, because they both don't calculate the loss and proceeds in the future of the current operation. The prominence of the embedded value is that it can consider the future profit of the current operation, and it can weigh the management production in a long term point of view. This is consistent with the long term of the life insurance management. In the recent years, it becomes an important task for the global life insurance to evaluate the life insurance company's performance by using the embedded value.Under the circumstance of global economics and incorporate finance, the insurance of our country is developing rapidly and connected closely with the international insurance. On the one hand, the insurance company in our country must improve the management level in the ardent competition to develop better. On the other hand, as the rapid development and the transformation of the rising method, more consummate insurance evaluation system is required to express the insurance in our country to provide a scientific warrant for our company and insurance management. So the overseas advance idea and management are greatly needed. But there are still some wrong ideas in the domestic life insurance company, such as pursuing more insurance fee and market share. Such ideas ignore the process of value management and creation, and it can bring bad effect for the whole life insurance.Whereas this, the study of the embedded value and the application in the life insurance company can play a key role both in the theoretical and practical sense.Based on the domestic and overseas study of the embedded value, especially the application in the life insurance company, and according to the characteristics of the domestic insurance and the prescript to the life insurance company of the wardship organization, the definition of the embedded value in the life insurance company and the actuarial theory are introduced; then the application of the embedded value in weighing the management profit of the life insurance company, value estimation, performance estimation during the managing and the salary inspirit is studied; the reason of the domestic life insurance company using the embedded value is analyzed; the actuality of the embedded value and the foreground in the life insurance company are introduced; and at last some advice is given as to the application of the domestic life insurance company. In this paper, lots of charts and formulas are used to study the embedded value and the application in the life insurance company, and the author brings forward some novel ideas through the words, the model, and the mathematic deduce. I hope this paper can be useful for the application of the embedded value in the life insurance company.