A variable annuity is a unit-linked or managed fund vehicle which offers optional guarantee benefits as a choice for the customer. The article gives an introduction to the form of guarantee benefits in variable annuity. In this paper, we construct an optima! static hedging ratio model based on the assumption of Black-Scholes model and life function, proves the existence and uniqueness of the solution of the optimal problem. Based on the simulation, we compare the optimal static hedging and full static hedging and find that the optimal static hedging can largely reduce the cost under the limit of risk bearing. |