A Study On Designing And Pricing Of Housing Reverse Mortgage Pension Insurance In China

The aging population problem becomes increasingly serious in China,and the current pension system is incapable of coping with the growing pension crisis.Therefore,it is urgent to explore a pension system that can effectively alleviate this crisis.This article focuses on the housing reverse mortgage pension insurance with designing a localized operation model based on China's national conditions and studying the pricing of the insurance.This paper first researches the development status of housing reverse mortgage pension insurance in China,and analyzes the causes of existing problems.Then it learns from the pension experience in developed countries and the feasibility of developing this business in China to explore out that reverse mortgage pension insurance should be led by the government with the participation of insurance companies.To address the current lack of credibility of housing reverse mortgage pension insurance,introduce government responsibility to protect the elders' various rights and interests with the credibility of the government;to address the elders' heritage motive,add a redemption right to the insurance;and to address the risks that insurance companies may face,the government implements the "bottom of pocket" policy to design a reverse mortgage pension insurance with redeemable housing guaranteed by the government.In terms of pricing,the paper combines a risk-neutral pricing with an actuarial approach to build a comprehensive pricing model for housing reverse mortgage pension insurance based on the fluctuation of three factors: interest rate,real estate value,and applicant's future life.In this pricing model,the two different situations including redemption right and non-redemption right are specifically distinguished by using the life annuity payment approach,and both use floating interest rates to create actuarial pricing models with the analysis of the pricing results.The innovations of this paper are the localization design of housing reverse mortgage pension insurance operation according to China's national conditions,and the combination of risk-neutral pricing and actuarial approach to build a comprehensive pricing model.Empirical analysis shows that the older applicant and the higher value of the real estate result in the more pension amount.