The guaranteed interest contract has embedded options, so the contract can be decomposed into three parts - trust fund, minimum interest rate option and dividend option on surplus. These elements can be valued using Monte Carlo simulation. It is found that the value of dividend option is sensitive to the distribution policies of insurance company and valuable under the high interest rate or the low minimum interest rate situation. The insolvency probabilities are not so sensitive to the distribution policies. The gap between risk free interest rate and guaranteed interest rate is the most important factor to the insolvency probabilities, and the initial capital or surplus is very useful to reduce the probabilities.
