A New Method to Evaluate Equity-Linked Life Insurance

Authors

  • Ming-Shann Tsai National University of Kaohsiung
  • Shih-Cheng Lee Yuan Ze University University of Adelaide
  • Jiun-Lin Chen University of Adelaide
  • Shu-Ling Wu Nan Shan Life Insurance Co., Ltd

DOI:

https://doi.org/10.7903/cmr.10397

Abstract

This paper provides a new method to appraise equity-linked life insurance products. Using the mixture mortality model to determine the death and survival probability, we calculate the premium for a death claim and a survival claim for equity-linked life insurance policies. The numerical result shows that the premium is higher than that calculated using the Brennan and Schwartz model. As a mixed survival function can solve the problems of the rigid application in Life Tables, the premium from our method is more accurate for life insurance. Thus, our method can help life insurance companies avoid potential losses from mispriced products. Keywords: Equity-Linked Life Insurance, Mixture Mortality Model, Mortality Rate To cite this document: Ming-Shann Tsai, Shih-Cheng Lee, Jiun-Lin Chen, and Shu-Ling Wu, "A New Method to Evaluate Equity-Linked Life Insurance", Contemporary Management Research, Vol.10, No.1, pp.23-32, 2014. Permanent link to this document: http://dx.doi.org/10.7903/cmr.10397

Author Biographies

Ming-Shann Tsai, National University of Kaohsiung

Department of Finance

Shih-Cheng Lee, Yuan Ze University University of Adelaide

Finance Discipline

Jiun-Lin Chen, University of Adelaide

Finance Discipline

Downloads

Published

2014-03-31

How to Cite

Tsai, M.-S., Lee, S.-C., Chen, J.-L., & Wu, S.-L. (2014). A New Method to Evaluate Equity-Linked Life Insurance. Contemporary Management Research, 10(1). https://doi.org/10.7903/cmr.10397

Issue

Section

Accounting and Finance