Abstract
Due to the increasingly aging population in Taiwan, more and more social problems arose. Therefore, the Ministry of the Interior will publish the Reverse Mortgage Plan in 2012 to solve the problems. Under the premise that the greybeards could live in their houses throughout their lives, they could transform their ownership of houses into cash to cover their daily expenses. After that, the real estate could simultaneously bring the effect of living and financing into full play. First, we use the Taiwan Life Expectancy Database and simulate house prices and interest rates to estimate the constant annuity and the maximum loan to value. Second, we build the insurance pricing model of reverse mortgage, and then determining the best time required for the repossession of the collateral after loan termination and the most appropriate premium rates under the condition satisfying the present values of expected claim losses (PVEL) are equal to that of insurance premiums (PVMIP). Finally, the Reverse Mortgage Plan can be more complete by using the method above. We hope it will be useful for the development of reverse mortgage.