| Summary: | 碩士 === 國立臺灣大學 === 財務金融學研究所 === 91 === Abstract
Because big economic changes make Taiwan insurance companies’ operation more and more difficult, it’s very hard now to earn enough return which could beat the past long-term guaranteed interest rate in recent low interest rate condition and poor stock market. In order to avoid the interest rate risk becoming more and more serious, the market strategy is to create new products: nontraditional products like variable and variable universal life which don’t have any interest rate guaranteed, and the cash values are linked with targets like mutual funds . The nontraditional life products combine one year renew term and mutual funds, so the investors could decide how to invest and take risk in the same time.
Nontraditional life products are popular in America, Europe and some other countries, a very important issue is “tax”. Because of tax benefit , these insurance products become attractive than comparative investment strategies. Do Taiwan nontraditional products also have similar tax advantages and can beat buy term and invest the difference strategies(BTID) ? In consumer viewpoint, we use the method provided by D’Arcy and Lee(1987) to simulate the cash value of Taiwan 7 variable universal life policies and BTID strategy . The assumption are : the insured is a 30 years old woman, holding 20 years, investment rate 7%, every year’s premium is 60,000, same face amount .The results are as follows:
1. If the insured is survival or is dead ( normal inheritance tax): variable universal life is wore than BTID because of high loading , related expenses and there is no capital gain tax for mutual funds.
2. If the inheritance tax rate is 33%, all variable life polices are better than BTID.
If the insured is 50 years old, it’s better to buy variable universal life policies because BTID should pay much higher insurance cost .
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