Insurance enters the "2 era" of predetermined interest rates
2024-10-08
According to regulatory requirements, starting from September 1st, the upper limit of the reserved interest rate for ordinary insurance products will be reduced to 2.5%; Starting from October 1st, the upper limit of the predetermined interest rate for dividend based insurance products is 2%. At present, the predetermined interest rate has entered the "2 era", and the pattern of the insurance market has quietly changed. The sales strategies of various insurance products and the choices of banks have also been adjusted accordingly. After the reduction of the predetermined interest rate, which types of insurance products have become mainstream in the market and key recommended by banks? On October 7th, after visiting multiple bank branches, it was found that in addition to traditional insurance products such as extended life insurance, more and more dividend insurance products that combine minimum coverage and floating income are also being put on the shelves, especially the dividend based extended life insurance that balances minimum coverage and dividends, which is becoming a new product of banks. Incremental life insurance remains popular this year, while savings insurance has continued to sell well. Among them, the incremental life insurance with a predetermined interest rate of 3% has become the most popular savings insurance product in the market due to its high return rate and flexible product design. However, higher predetermined interest rates also increase the risk of interest rate spread losses in the insurance industry. To this end, the regulatory authorities issued a notice in August on improving the pricing mechanism of personal insurance products, reducing the predetermined interest rates of ordinary, dividend based, and universal insurance products. Insurance products with predetermined interest rates exceeding the upper limit have now been discontinued from sale. What are the new changes in the insurance market after the reduction of the predetermined interest rate? Beijing Business Daily reporters visited various bank branches on October 7th. A wealth management customer manager of a state-owned bank told a Beijing Business Daily reporter that although the returns are not as good as before, the extended life insurance is still the hottest product recently. If it is a young customer, we generally recommend purchasing extended life insurance products. In fact, not only in the bancassurance channel, but also in the personal insurance channel and intermediary channel, extended life insurance is also a popular product at present. The reporter noticed that many insurance agents are still "selling" extended life insurance on their social media accounts. Incremental life insurance remains popular even after the scheduled interest rate is lowered, mainly due to its high guaranteed interest rate and flexibility, allowing for the withdrawal of cash value at any time According to He Jiyong, the president of Zhangru Research Institute, in the current interest rate environment, extended life insurance can provide relatively stable returns. Coupled with the long-term prediction of interest rate decline, the advantages of extended life insurance are even more obvious. Entering the lobby of a certain city commercial bank, the reporter noticed an insurance product promotional board that read: "Invest in me for five years, protect you for life. Please consult the lobby manager for more information." The bank's lobby customer manager recommended a dividend based lifetime life insurance underwritten by Dajia Life Insurance to the reporter. In the future, dividend based insurance products will become an important product for insurance companies to sell. Recently, several listed insurance companies have clearly stated at their 2024 mid-term performance conference that their future product strategies will focus on dividend insurance. Executives from large insurance companies such as Ping An, China Pacific Insurance, and China Taiping have all expressed their plans to increase the proportion of dividend insurance sales to 50%. Prior to that, dividend insurance has always been the main type of insurance in countrymen's life insurance market. Yang Zeyun, a finance teacher at the School of Business of Beijing Union University, said in an interview that from the current reality, in an environment where interest rates continue to decline and other investment products fluctuate greatly, dividend insurance is a good choice for sharing the operating income of insurance companies while obtaining insurance protection. Among various types of dividend based insurance products, dividend based incremental life insurance has a higher level of attention. Another account manager of a joint-stock bank told reporters that in the future, the bank's main product will be the dividend based incremental life insurance. In addition to the 2% predetermined interest rate guarantee income, this type of product also has dividends, and the combined income is quite good. However, the new product has not yet been fully launched and is expected to be completed after the holiday. Recently, the bank has conducted unified sales training. The reporter learned that dividend based life insurance can also distribute dividends to policyholders based on the actual operating situation of the insurance company, while retaining a predetermined interest rate of 2%. However, it should be noted that the main factor affecting the level of policy dividends is the actual operating conditions of the dividend insurance business, therefore, there is uncertainty in the annual dividend distribution. Senior actuary Xu Yuchen stated that the predetermined interest rate for the guaranteed portion of dividend based incremental life insurance has decreased to 2%, which is 0.5 percentage points lower than the 2.5% for traditional incremental life insurance. In addition to the guaranteed portion, customers can enjoy dividend income, and policyholders can share the operating results of dividend products with insurance companies. Which type of product will be more popular in the future life insurance market, dividend based insurance products or traditional incremental life insurance? Xu Yuchen stated that incremental life insurance and dividend insurance are not contradictory. In incremental life insurance, there are both traditional and dividend products. As for which type of product will sell better, it still depends on the product's own level of profitability. Xu Yuchen gave a simple example that according to regulations, insurance companies should allocate at least 70% of the distributable profits of their dividend insurance business for the current year to customers. If the investment return rate of an insurance company's dividend insurance funds is 3.5%, minus the guaranteed return of 2%, the remaining 1.5% is multiplied by 70%, and the customer policyholder can receive an additional dividend income of about 1%. For ordinary consumers, whether choosing traditional insurance products or dividend based products, they need to make a choice based on their own situation and pay attention to the risks involved. Xu Yuchen reminds that traditional life insurance products place more emphasis on medium and long-term value. Consumers need to be aware that withdrawing insurance in the short term will result in financial losses. Consumers should choose according to their own needs and pursue stable returns in the medium and long term, rather than high returns in the short term. Also, it should be noted that if choosing a dividend based product, there is a possibility that the dividend portion of the dividend insurance will be zero when the investment return of the insurance company's dividend account is not particularly good. (New Society)
Edit：Liu Yanghe Responsible editor：Li XiuMei
Source：Beijing Business Daily
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