Study Of Participating Insurance Product Pricing Based On The Cash Dividend

Participating insurance is such a life insurance policy. The insurance company distributes surplus to customers according to the annual actual operating conditions of the company under the premise that the commitment of fixed income. So participating insurance is planted with the function of security and investment function. Participating insurance has become the mainstream product since 2000 it was first introduced to China market. Especially after the 2009 financial crisis, people realized the function of the participating insurance product against inflation and interest rate volatility,so it set off a boom in domestic.Single premium of participating insurance usually is the sum of endowment insurance indemnity of insured and the present value of the investment income. So the uncertainty dividends of insurance company is the key factor that influence the single premium of participating insurance. The bonus of participating insurance product usually can be divided into two kinds according to different distribution methods. That is cash dividend and bonuses dividend. Cash dividend is the way that insurance company pay dividends to the policyholder. Bonuses dividend is the way that insurance company pay dividends to the policyholder in the form of purchase additional insurance product. This paper only consider participating insurance pricing problem under cash dividend.This paper first discusses the investment situation of our country’s participating insurance, then cited some random process theoretical knowledge. Setting up portfolio returns model. The Vasicek model and CEV model are used to get the differential equation of Treasury bonds and securities market’s earnings.Set the proportion of investment, to form a portfolio income model, and then got annual returns of the portfolio. In the case of only consider cash dividend, using financial economics risk pricing principle. Establishing the special reserve account of share out bonus in the case of stochastic interest rate, death completely dispersed. Calculate the value of participating insurance and compared with traditional life insurance. In additional, this paper also has carried on the sensitivity analysis. It can provide some reference to insurance company about product pricing and risk control.