The Research On Unit-Linked Insurance's Product Design And Pricing Strategy

Along with the changing of the macro-economical environment and the situation of the financial market, the reduction of the policy value for life insurance because of inflation ,together with the loss from interest gap have turned to be the most intractable problems for all the life insurance companies. Meanwhile, the innovation of financial products has been to be one of the most important driving force for the development of the industry since last century. The unit-linked insurance (Unit -link) was just born under such a background. The unit-link combined the function of both t life insurance and the investment tools, and generally speaking its profit wasn't guaranteed. Therefore, the risk of investment was totally transformed from the insurance company to policy holders, while the latter can get the profit of investment.There are sufficient research informations with variety of thesis in the developed country for they have had the unit-link selling for several decades. But the relevant domestic literatures are poor in quantity. Moreover, most of them are concerning the concept of unit-link, or the macro-aspect like tax and law systems and capital investment. While few of them referred to the micro-aspect, especially the aspect of product design and pricing strategies. Considering the absence, the intention of my thesis is to discuss the two aspects ,using the mature foreign experience and their study for reference, and consequently get some useful conclusion for the practice of insurance company and the regulation of supervision institution.This paper begins with the introduction of unit-link, including its definition, feature and history . Then the second section is an analysis of three typical unit-link products in the foreign market. The third section focuses on the design of unit-link's policy items and its account. And draws some conclusion about the way of premium payment , the decision of sum assurance (SA),the lowest profit guarantees and the right of Reset Decision , together with the valuation and management of the separate account and its investment strategy. The fourth section shows two important strategies of the unit-link pricing process, that is the unbundled and cautious way of pricing , through demonstration of the traditional life insurance's pricing principle and actuary model ,and the analysis of difference between the traditional product and unit-link in the future cash flow and way of profit emergence. Finally the paper ends with a general conclusion and suggestion.