Study On The Product Design And Risk Management Of Equity Index Annuity

With the continued implementation of China’s Planned Birth Policy, the continuous improvement of living standards and the rapid development of medical technology, which decline continuously the birth and death rates and increase the average life expectancy. Hence, the phenomenon of aging is becoming increasingly severe, and coping with the aging has become an important issue of China’s economic and social development Although we have the basic pension insurance system which the government leads and the enterprise annuity system which the enterprise leads, the security system is relatively low, which cannot meet the people’s growing pension financial planning needs. Therefore, the need of commercial pension insurance has a great gap, and developing the annuity product which meet people’s demand has an important practical significance.As a mature annuity product in the U.S. and European, the equity index annuity which connect with an index in the capital market, ensures the safety of the insured principal and shares with the fruits of development of the capital market reform, which can help to prevent the longevity risk, inflation risk and investment risk. However, China’s life insurance market has not the types of products. Therefore, we study the pricing models and risk management methods, derive theoretically the five pricing models of Point-to-Point and Annual-Reset, and design a simple product based on the theory and practice of the developed insurance market, which provide a reference for developing the equity index annuity. Finally, we get the strategy of China’s implementation of equity index annuity, and give some research suggestions.