A Study Of Traditional Life Insurance Products Pricing Model And Method

The insurance market is currently flooded with a variety of life insurance products, but risks of different types of products are not all the same. Product pricing plays an important role in the risk management of life insurance compa-nys.However, common pricing methods do not consider the relationship between profits and risks, which could lead to loss of profit or bankruptcy.Three main types of traditional insurance (term life insurance, endowment insurance and whole life insurance) are considered in this paper.We focus on the difference of risks caused by ages of the insured and types of insurance. First,we deduced the formulae of the prospective loss and established quadratic program-ming models for the pricing of insurance products. Based on some conditions,we proves the existence and uniqueness of the solution. Also in the case of multiple constraints,numerical analysis are made to study the effects of different risks on the price of insurance products.Risk measure indicators we used in this paper reflect the risk differences be-tween the heterogeneous insurance groups.Based on the pricing model we used,we obtained the optimal prices of the different insurance products to ensure the fair-ness of prices and avoid the anti-selections.