| Summary: | 碩士 === 國立高雄第一科技大學 === 金融研究所 === 99 === Due to the declining of interest rates, insurance companies generated much smaller investment returns in recent years. In early years, their sale of traditional insurance policies was subject to a guarantee of high expected interest rates, which forced them to bear high interest spreads. With the innovation and diversification of financial products, financial institutions have released various new products to attract investors. Against this background, investment-oriented insurance products has gradually become the main product of life insurance companies. Variable universal life (VUL) insurance is an insurance policy that integrates life insurance and mutual funds investment. Holders of this insurance policy are entitled to the benefits of life insurance and also earnings from mutual funds investment, which are however not guaranteed. The insurer does not need to guarantee an expected interest rate and can thus reduce interest risks. However, premiums of this type of investment-linked insurance are not collected in the same way that premiums of traditional insurance are collected. The premium composition directly affect investment returns and account values. Besides, traders of this type of insurance may not always sufficiently explain the composition of the insurance and disclose investment risks. Hence, disputes over this type of insurance policy have occurred from time to time.
This study analyzed the features of two main VUL insurance policies (Type A and Type B) and simulated the distribution of cash flows in each policy. The simulation analysis could allow us to observe the investment returns and guarantee for buyers of this type of insurance policy and the difference between buying this type of insurance policy and buying life insurance and mutual funds separately. The empirical findings were as follows: In terms of the sum of life insurance benefits and balance of investment returns, buying life insurance and mutual funds separately ensures the highest sum, followed by Type B VUL insurance policy and Type A VUL insurance policy in the first year; in the following years, Type A VUL insurance policy begins to have a rising value, exceeding that of life insurance and mutual funds bought separately and Type B VUL insurance policy. In terms of only investment returns, in the early period of insurance, buying life insurance and mutual funds separately yields the highest value, followed by Type A VUL insurance policy and Type B insurance policy. In mid and late periods, Type A VUL insurance policy has a significantly higher value than life insurance and mutual funds bought separately and Type B VUL insurance policy.
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