10.30495/ijm2c.2023.1968679.1262

‎U‎sing Fuzzy Interest ‎Rates for Uncertainty‎ Modelling in Enhanced Annuities Pricing

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  • Mahboubeh Aalaei*1,
  1. Personal Insurance Research Group, Insurance Research Center, Tehran, Iran

Received: 02-10-2022

Accepted: 15-12-2022

Published in Issue 01-12-2022

Copyright (c) 2024 International Journal of Mathematical Modeling & Computations

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Aalaei, M. (2022). ‎U‎sing Fuzzy Interest ‎Rates for Uncertainty‎ Modelling in Enhanced Annuities Pricing. International Journal of Mathematical Modelling & Computations, 12(4), 265-274. https://doi.org/10.30495/ijm2c.2023.1968679.1262
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Abstract

The modeling of uncertainty resources‎‎ is very ‎important in ‎insurance pricing‎‎. ‎In this paper‎, ‎fuzzy set theory is implemented to model ‎interest ‎rates ‎as ‎an ‎uncertainty ‎resources‎ for calculating the price of ‎enhanced ‎annuities. In this regard, ‎t‎he ‎single ‎fuzzy‎ ‎premium ‎for a‎ ‎fixed ‎annuity ‎payouts ‎is ‎calculated ‎using‎‎‎ ‎adjusted ‎mortality ‎probabilities ‎for ‎an ‎insured ‎with ‎health ‎problems ‎and ‎the ‎results ‎are‎ ‎compared ‎with ‎standard ‎status. ‎As the ‎adjustment ‎multiplier‎‎‎ increases, which means that the health problems of the insured are worse, the life expectancy of the person decreases. In addition, as adjustment ‎multiplier‎‎‎ increases, the insurance premium decreases, which is due to the adjustment of survival and mortality probabilities based on the individual's health status‎. Also, to show the validity of the ‎proposed‎ fuzzy method, the random interest rate has been used. The results of the ‎fuzzy ‎and ‎random‎ models are close to each other ‎which indicates the validation of proposed method‎.
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