Life Insurance Products Fuzzy Pricing Related Issues

In life insurance,product pricing is one of the core problems that have impact on the survival and development of insurance companies.This paper focuses on the estimation of interest rate in product pricing.Traditional financial pricing model and stochastic model cannot provide satisfactory result because of their idealized assumptions,then fuzzy mathematics was introduced into life insurance product pricing as a new method.This paper makes an improvement on the existing fuzzy estimation model.We define a new kind of fuzzy numbers——Quadratic Lateral Edge Trapezoid Fuzzy Number(QLETFN) in order to provide more options on the selection of discount function coefficients,and estimate the term structure of fuzzy interest rate using fuzzy linear regression to increase the reliability of our result. Furthermore,a quadratic programming model is established to optimize the estimation accuracy.Chinese fixed-rate bonds are used to compare our model with the existing one to show us that our model performs well on the degree of fuzziness and estimation accuracy.We also provide a specific example for life insurance product pricing.In the discussion of improvement,additional constraints are applied to ensure the estimation accuracy of each bond and we expand the application of our model to the calculation of expense-loaded premium.