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Article 110 of the original article
"Although there is a guarantee under the dividend insurance, the dividend part of the demo income is uncertain. This means that in the worst-case scenario, the dividend may be 0 and only a predetermined interest rate of 2.5% is guaranteed. 』
If you are first exposed to participating insurance, you are most worried about whether this is the case.
At present, dividend-paying increased life insurance occupies half of the wealth management insurance, so popular, is it that people who buy participating insurance have such high expectations for insurance companies?
In fact, although dividends are uncertain, they can't help but be messed up by insurance companies, and there are hard and fast regulations on supervision.
I will explore why insurance companies should strive to achieve a 100% fulfillment ratio from the two aspects of insurance companies and regulators.
Note: The following participating insurance refers to participating increased life insurance.
Demonstration benefits are the "business objectives" of the insurance company
For the insurance company, the demonstration income shown in the proposal is its business goal, which is both a qualified line and a tight mantra.
(1) The form of dividend-paying life increase
The traditional incremental whole life, with a predetermined interest rate of 3.0%, is a definite return, and it is clearly shown to us before we apply for insurance, neither more nor less.
Dividend-paying increased whole life = guaranteed predetermined interest rate of 2.5% + dividend. Long-term compound interest can exceed last year's 3.5% increase in traditional life.
To put it simply, the guaranteed benefit of the dividend-paying type is slightly lower than that of the traditional type, but with the addition of dividends, it can even reach 3.5% of the original product.
Let's take a look at a diagram, which will be more intuitive, which are:
3.0% increased life;
Participating insurance with a guaranteed predetermined interest rate of 2.5% (guaranteed part and including dividends);
and a fixed increase of 3.5% last year.
For example, in the picture above, the 40-year-old sister pays 200,000 yuan a year, pays for 5 years, and the total premium is 1 million yuan.
This line chart is still very intuitive, in the 65th year, the difference between the four schemes is basically 2 million each.
On the one hand, it has a good guaranteed income, and on the other hand, it can also give us more imagination.
In fact, it is to use the guaranteed return of 0.5% less to win the expected return of 1%+.
So now many people will prefer participating insurance.
If you want to see the difference between products according to your age and premium budget, you can directly add me to WeChat, and you can make targeted plans.
(2) Business objectives
Since the dividend-paying increased life can give us higher returns than the traditional increased life, there must always be an expectation, which is the business goal for the insurance company.
On top of the 2.5% guaranteed predetermined interest rate, is it 1%, 2% or 3% more?
There has to be a reference for this.
The dividend situation demonstrated by the insurance company is a demonstration of the 100% fulfillment ratio.
Each insurance company sets a standard that reflects their business goals.
I have sorted out the 9 participating insurances in the first echelon currently on sale, and the demo benefits of each one are also different.
Note: At present, the market [demo income first echelon] dividend-type increase life demonstration table, click on the picture to view the high-definition large picture
If it's too low, it's not attractive to our customers;
If it is too high, there will be great pressure on the insurance company to achieve it in the future.
Therefore, this is the actuarial business goal of each insurance company according to its own actual situation, research and judgment on the future, and it is not written blindly.
(3) Regulatory requirements
How much dividends are divided
Now the dividend insurance has much stricter regulatory requirements.
All participating insurances are uniformly demonstrated in accordance with mid-range standards.
Then some students will have questions, are there still resistance and high-end?
Yes, there used to be.
So it's very messy, many insurance salesmen use high-end standards to explain to you, and in the end, even if you reach the mid-range, you will feel that you have not achieved the expected goals, ah, dividend insurance is a lie.
Now the regulation stipulates that the distribution ratio of the dividend demonstration is uniformly 70% of the distributable surplus, that is, the lower limit is 70%;
When the company actually distributes the distributable earnings, it can divide 80% and 90%, but you can only use 70% when you demonstrate.
So now it's all going to be in the mid-range (4.5% - predetermined rate).
This 4.5%, and 70% distributable surplus, we don't need to understand, it's quite complicated, interested students can discuss with me.
If you're looking at the company's business objectives, look at the demo earnings that include dividends.
Announcement of fulfillment ratios
Regulatory requirements require insurance companies to disclose the fulfillment ratio of dividends every year, i.e. (actual dividends/demonstration dividends) X 100%. In other words, reaching more than 100% is considered to be the fulfillment of the promise of demo spillage.
This table is the 9 participating insurances in the first echelon of demo income currently on sale, the corresponding insurance companies, and the dividend fulfillment ratio.
We see that 6 out of 9 companies have historical fulfillment ratios of 100% or above.
In addition, if the actual dividend level for three consecutive years does not reach the mid-range dividend demonstration level, the insurance company must lower the demonstration level, and it shall not be higher than the company's actual average dividend level in the past three years.
That is to say, if you don't meet your expectations for 3 years in a row, you don't paint cakes for others, and honestly reduce the demo income for me.
The report card of the dividend fulfillment ratio is clearly laid out, which one is more competitive, and the market will vote with its feet.
If the insurance company does not do it, then the regulation and the market will regulate it.
Meet the customer's "reasonable expectations"
One of the principles of insurance companies for the management of participating insurance is to manage the reasonable expectations of policyholders.
(1) Reasonable expectations
What do we expect when we buy wealth management insurance?
Safe and robust earnings.
It's safe, so you don't have to worry about it. A life insurance policy is one of the only three safe financial investments that coexist with bank deposits (less than 500,000 yuan) and treasury bonds.
Stability has many meanings, in the dividend-type increase life, that is, the dividend income should be stable.
In addition to achieving the 100% fulfillment ratio as much as possible, we should avoid jumping up and down due to the amount of dividends, which will cause us to be shocked.
In other words, don't give me 80% of your dividend achievement rate this year, 200% next year, and 50% the year after.
Therefore, the participating insurance will introduce a [smoothing mechanism].
(2) The source of the dividend benefit
Before talking about the smoothing mechanism, let's take a look at what is the source of profit for insurance companies?
The main difference is the three differences, the interest rate difference, the death difference, and the fee difference.
That is, the difference between the actual interest rate and the expected interest rate, the difference between the actual payout and the expected payout, and the difference between the actual operating expenses and the expected operating expenses.
The dividends of dividend insurance are actually the interest rate spread part, and the more you earn in the investment of dividend-paying products, the more dividends you will pay, and the higher the dividend fulfillment ratio will be.
What is the premise for insurance companies to sell more premiums?
The premise is to give the benefits to the customer in place.
If the actual performance of an insurance company's previous participating insurance was very poor or very unstable, I think your company's current product will also be cautious;
If the product you buy now will not perform well in the future, people in the future will not be able to consider the company's products in the future.
Therefore, after the insurance company collects the premium, it does a good job in operating investment, steadily achieves various previous business goals, and gives customers the expected results, so that the follow-up products can sell better.
Therefore, insurance companies will try to run the company and the product well.
(3) Smoothing mechanism
As mentioned earlier, the main source of dividends is the investment spread of insurance companies.
For participating insurance, the proportion allocated to customers is at least 70% of the distributable surplus (70% for example), and the actual ratio can be 80%, or 90%.
Suppose the insurance company earns more in a certain year, it can put a part of the surplus into the [special reserve for dividends], which means to save it temporarily.
If the general environment in the second year is average and the return of the demonstration income cannot be achieved, then the insurance company can take out the previous "deposit" to make up for it and enhance the confidence of policyholders.
(4) What is the significance of the smoothing mechanism to everyone?
For insurers:
The business cycle of the insurance company is very long, and the smoothing mechanism can iron out the cycle.
If there is a down/up cycle in the macro environment, the fluctuation of the dividend fulfillment rate will be slow because of the existence of the [Dividend Special Reserve].
For consumers:
The smoothing mechanism brings relatively stable dividends in a long period. Because the expectation is controllable and fine-tuned, the experience of holding will be relatively good.
(5) Realistic performance of the smoothing mechanism
Everyone knows the economic environment in the past three or four years, especially in a difficult investment year like 2022, many insurance companies have also achieved the promised demo dividends.
Did you really earn the expected gains that year?
It still has to rely on the dividend smoothing mechanism.
For example, the fulfillment ratios of Zhongyi Life Insurance, Sino-British Life Insurance and China Post Life Insurance have performed well in the past three years, all of which have reached 100% and above, and the historical data has been very stable.
How to judge participating insurance products in multiple dimensions
There are five criteria for judging whether a participating insurance is worth buying.
In addition to the above-mentioned interest presentation and dividend fulfillment ratio, we also need to look at the shareholder background, solvency, comprehensive investment return and profit.
1. Benefit presentation, reflecting the business objectives of the insurance company for the product;
2. Dividend fulfillment ratio, transcript of participating products of insurance companies;
3. Solvency, the judgment of the operating level and stability of the insurance company;
4. The comprehensive investment rate of return represents the real investment ability of the insurance company and is the source of dividends;
5. Shareholder background, representing the strength and resource acquisition ability behind the insurance company.
For details, you can take a look at my article the other day:
Note: Click on the image to view a high-resolution larger image
For example, the above 9 dividend-type increased life products that are currently on sale [the first echelon of demonstration income] are more recommended for Zhongying Fu Manjia, China Post Yuexiang Yingjia and Zhongyi Lifetime Zhongyi Longxi Edition.
The reason why Zhongying Fumanjia recommends it is that all five aspects are completely victorious, and there are no shortcomings.
China Post Yuexiang Yingjia also recommends that the background of a large factory, the demonstration income is high, and the dividend fulfillment rate has reached more than 125%. Although China Post will lose money in 2023, behind it is the national team of China Post, and we must also believe in the operation adjustment of China Post.
Zhongyi Lifetime Zhongyi Dragon Seal Edition is also recommended, although the demo income is the lowest among the 9 products, but in fact, it is not much lower. In addition to the demo benefits, the other four aspects are top-level. If you don't mind that the dividends you like are a little less, but you want to be able to eat the cakes painted by the dividends, you still have a good choice.
The other 6 products do not fully meet the five standards, and it is not that they are not recommended, at least, through analysis, we know their shortcomings.
For the specific evaluation content, you can see this article a few days ago, 9 products are analyzed one by one from five aspects, and you will know how to choose dividend insurance after reading it.
The dividend portion of the participating insurance is not guaranteed.
But the insurance company will give us a demonstration benefit (business objectives);
We can also refer to the past fulfillment ratio to judge the fulfillment ratio and stability of the insurance company's participating insurance.
You can also look at the background of the shareholders of the insurance company, the background of large enterprises and large central enterprises will make us more assured, the same way, the background is stronger, and the investment resources are more advantageous;
You can also check the rating (solvency) of the insurance company by the regulator, and the regulator will help us check it;
Finally, we can also refer to the company's past investment capabilities and profits to see the company's overall operation.
With the above five criteria, the market will vote with its feet as to which company's products are more competitive.
Therefore, the pie of dividend insurance is not a scribble, but a cautious display of its own business objectives under the multi-dimensional monitoring of supervision, the market, and its own development.
If you have any questions about savings insurance and wealth management insurance, I have also compiled a "savings insurance information package", which can contact me if you need it, or call/voice for ten minutes, and you can quickly solve all kinds of savings insurance-related questions.