Description: Introduction to option pricing, with special attention to issues in applying these tools to price equity-linked insurance products. Clear, accessible explanation of key results of mathematical finance including risk-neutral valuation.

Description: As equity markets decline and become more volatile, the likelihood of significant guaranteed benefit claims increases, while increases from mortality and expense fees declines. The article illustrates how to use a derivative contract, a properly structured total return swap, to turn a company's uncertain M&E revenue patterns into predictable revenue.