Optimal investments strategy for whole life insurance policies

Life insurances have become a necessity in our daily life. The United States government census data shows that insurance premiums totaled approximately 8.18% of the GDP. As for Taiwan, the government statistics data indicates that each person holds 2.23 life insurance policies on average and the money spent in life insurances measure up to 18.19% of the GDP, ranking first in the world. However, most people make investments in life insurances with a buy-and-forget strategy, not knowing how much this insurance is worth to them. In this paper, we focus on providing a valuation method for both annuity and non-annuity style life insurances, including fixed-term and whole life policies. Based of the FinancialCloud architecture, we designed a system to compute how much an insurance policy is worth. We reveal the knowledge on what did the insurer pay for the insurance, what does the insurer get from the insurance, and enable the comparison on different policies to provide suggestions for optimal investments.