Theory And Case Study On A Class Of Combined Endowment Insurance Model Under The Stochastic Interest Rate

With the development of China’s market-oriented reform of interest rate process as well as the reasons for the frequent fluctuations in interest rates, theory and practice for product pricing strategy of the China’s life insurance company is facing new issues and serious chal-lenges. This is because that the traditional actuarial theory often assumes that the interest rate is determined, so once a predetermined rate of life insurance policies is determined, then it is not changing in its life cycle. But in reality, life insurance is a long-term economic activ-ity, so the government’s action, changes in economic environment and other factors can cause fluctuation in interest rates. Changes in interest rates will make predetermined and real rate of life insurance higher, this is a significant impact on the life insurance company. Therefore, theory and methods of life insurance actuarial under stochastic interest rates become the focus of research in recent years. Considering the impact of the actual investment on premiums and unexpected events on interest rates, in this thesis, first of all, the randomness of the interest force in insurance business is described by both reflex-origin Brownian motion and Poisson process. Secondly, on this basis, we establish a class of adjustable insurance amount home-based combined insurance double stochastic model by whole life insurance, pension insurance and savings payback part, and a general formula of yearly balanced insurance premiums in this type of insurance and a relatively simple formula of yearly balanced insurance premiums with uniform distribution death (UDD) hypothesis are given. Finally, the rationality and practicality for the conclusions are verified by some examples of the analysis process. This type of insurance model is consistent with the actual situation, and it has important theoreti-cal and practical value for insurance company to charge a reasonable premium, pay insurance and avoid the manage risk.