"China Economic Weekly" reporter Xie Wei丨Beijing report
Incremental whole life insurance is on fire.
"The lifelong guardian of the grown-up", "the last swan song of capital preservation", "tears of the times", "your financial real estate", "visual saving plan"... In the overwhelming propaganda of various channels, the incremental whole life insurance has been crowned with various various names.
Increased whole life insurance has become the main product of many life insurance companies.
A recent report released by the Insurance Association of China shows that in the past two years, incremental whole life insurance products have occupied the absolute mainstream position in the bancassurance market.
In 2021, whole life insurance will account for seven of the top ten annual sales of regular products.
Even insurance brokers have a deep understanding of the fire of increased whole life insurance.
"I have sold more than 2 million incremental whole life insurance this year." Wang Lu, an insurance broker of Mingya Insurance Brokerage Company, bluntly told the reporter of "China Economic Weekly" that there is now a trend of people buying savings insurance, more or less I will buy less, unless I don't pay attention to financial investment at all.
"I have a lot of small orders, but there is an additional employee who joined in June, and has opened several orders of 3 million yuan in a row." Wang Lu said, "If there is an investment of 3 million yuan, it is better to buy a house or buy a lifetime increase. Life insurance? Back to 10 years ago, I absolutely supported you to buy a house, but the times are different now.”
What is increased whole life insurance?
Why do insurance consumers and insurance companies flock to it?
However, such a popular product will be strictly regulated by the China Banking and Insurance Regulatory Commission in 2021, and some products have even been removed from the shelves.
Is it really reliable?
Why is it on fire? ——Explosive financial management alternative products
Whole life insurance products are life insurance that pays insurance benefits on death and has a lifetime insurance period.
Increased whole life insurance refers to a whole life insurance in which the insurance amount increases according to the agreed proportion with the increase of the insurance year during the validity period of the insurance contract.
The so-called "increase" means that the insured amount of the death benefit is increased year by year.
Although the upfront sum assured is usually not high, the sum assured and cash value will continue to grow over time, and the upfront cash value will grow faster.
Although it is an insurance that pays on death, most of the increased whole life insurance can receive part of the cash value by reducing the insurance, which makes it have the effect of "wealth management product".
An introduction to the incremental whole-life life insurance product presented by Wang Lu to reporters shows that if a 30-year-old woman chooses this protection plan, she will pay an annual premium of 200,000 yuan, pay the premium for 5 years, and invest a total of 1 million yuan. A one-time recovery of 1.139 million yuan.
If it is not withdrawn, the effective sum assured will be maintained at a compound interest rate of 3.5% every year, which is always needed and available at any time.
She introduced to reporters that the core "esoteric meaning" of incremental whole life insurance is that you can withdraw money midway.
The increased whole life insurance can be reduced at any time, and there is no need to receive a fixed amount of money or a fixed time.
You can also obtain a large amount of cash flow through "policy loan" to solve the problem of temporary capital turnover.
"This is a pool of funds with compound interest growth. It is mandatory to save in the early stage, and it can be loaned in the future."
Looking at the various increased whole life insurance products on the market, the insurance age and the threshold for investment are very low.
Some products can be insured one week after the child is born, and the maximum can be cast at the age of 75.
In terms of premiums, the annual premium threshold can be as low as 1,000 yuan.
For insurance brokers, long-term insurance sales rebates are very high, up to 20% to 40%.
It is this actual "financial management" effect that makes incremental whole life insurance stand out.
It locks in long-term income and determines payment, which is undoubtedly very attractive at the moment of "breaking just exchange" and falling interest rates.
"Obviously, it caters to people's need for insurance against inflationary pressures, and coupled with strong sales from insurance companies, it will become popular," said Wang Guojun, assistant dean of the School of Insurance at the University of International Business and Economics.
So, is increased whole life insurance worth buying?
"All insurances are highly individualized, and whether it is worth it depends on the individual circumstances of the insured." Wang Guojun pointed out to the reporter of "China Economic Weekly" that all insureds will eventually die, and each insured (actually (the beneficiary above) will receive their share of the death benefit, the only difference being when the benefit is obtained sooner or later.
Therefore, the mutual benefit of whole life insurance is relatively poor, and the saving capacity is relatively strong, so the rate is higher.
Whether it is cost-effective depends on the comparison between the predetermined interest rate of the product and the insured's own return on investment in the capital market. If it is an investment-linked, dividend, and universal product, the settlement interest rate must be added.
If the insured's own investment rate of return in the capital market is higher than the sum of the policy predetermined interest rate and the settlement interest rate, it is not cost-effective for him; otherwise, it is cost-effective.
What risks are hidden behind "financialization"?
In fact, the "prosperity" of incremental whole-life life insurance stems to a certain extent from the "recession" of annuity insurance.
In 2013, the incremental whole life insurance first tested the waters in the Chinese market.
In 2017, small and medium-sized insurance companies successively launched incremental whole-life life insurance, but they were always inferior to annuity products.
The turning point occurred in 2019.
In the same year, the China Banking and Insurance Regulatory Commission issued the "Notice on Improving the Formation Mechanism of the Assessment Interest Rate of the Liability Reserve in the Personal Insurance Industry and Adjusting the Interest Rate for the Assessment of the Liability Reserve" (the "Circular No. 182"), and the upper limit of the assessment interest rate of the annuity insurance liability reserve was officially set by the annual The compound interest rate of 4.025% has been reduced to an annual compound interest rate of 3.5%.
In 2020, annuity insurance with a predetermined interest rate of 4.025% will be delisted one after another.
In comparison, the incremental whole life insurance with faster appreciation speed and "flexible reduction" has begun to emerge.
At the same time, with the new asset management regulations breaking the rigid exchange, bank wealth management products have gradually transformed into net worth, and the yield has been declining.
As of the end of 2021, the rectification of the wealth management stock has been completed, and the capital-guaranteed wealth management with the nature of just exchange has been cleared.
Against such a background, incremental whole life insurance is taking advantage of the trend, and consumers and insurance companies are flocking to it.
In 2021, large insurance companies will also launch incremental whole life insurance products one after another, and competition will become increasingly fierce.
At present, among the listed insurance companies, China Life Insurance, Ping An Life, and New China Insurance have all launched incremental whole-life insurance products.
An insider of a life insurance company said that it is the first time this year that the incremental whole-life life insurance has been launched in the individual insurance channel. At present, the sales are very good, and it is also more attractive to customers, especially for customers with long-term savings needs.
The "2021 Bank Agency Channel Business Development Report" released by the China Insurance Association shows that in 2021, incremental whole life insurance products will have a high degree of capital flexibility.
The versatile functions make it stand out from the competition and occupy the absolute mainstream position in the bancassurance market.
Whole life insurance occupies seven of the top ten annual sales of regular products.
However, there are hidden risks behind "financialization".
Some incremental whole-life life insurance products use the insurance reduction method to realize "long-term insurance and short-term insurance", and turn long-term products into short-term savings, which is likely to cause cash flow risks for insurance companies.
Once the income from the use of funds declines, it may also generate new risk of spread loss, which will lead to the risk of surrender.
This is inconsistent with the idea that regulation should guide the development of long-term products.
Therefore, the China Banking and Insurance Regulatory Commission (CBIRC) is also increasing its supervision on incremental whole life insurance products.
As early as December 31, 2020, the China Banking and Insurance Regulatory Commission pointed out in the "Circular on Issues Concerning the Submission of Recent Personal Insurance Products and Regulatory Reports" that some companies' whole life insurance products have the problem of "long-term insurance and short-term insurance".
The report stated: "For example, a whole life insurance policy submitted by Pramerica Fosun, Tongfang Global Life and Huatai Life Insurance, the product can be flexibly reduced, and there is no proportional limit, and there is a risk of long-term insurance and short-term insurance. A certain whole-life life insurance submitted by Sunshine Life Insurance, The surrender rate of the product in the first five years is too high, and there is a risk of short-term long-term insurance.”
At the end of June 2021, the Personal Insurance Department of the China Banking and Insurance Regulatory Commission issued a relevant notice again, naming the increased whole life insurance products sold by Beijing Life Insurance Tianjin Branch that have risks such as low level of protection, long-term insurance and short-term insurance, and disguised wealth management.
On January 27 this year, the Personal Insurance Department of the China Banking and Insurance Regulatory Commission issued the "Notice on Recent Personal Insurance Product Issues", stating that some problems with incremental whole-life life insurance products were found during product inspection.
For example, the incremental interest rate of 11 types of incremental whole-life life insurance submitted by Haibao Life, Hetai Life, Hengqin Life, Huagui Life, Xinmei Mutual Life, and Xiaokang Life Insurance exceeds 3.5%, which is easy to be confused with the product pricing interest rate, and there is a risk of gimmick marketing .
In February, the "Negative List" of Personal Insurance Products (2022 Edition) of the Personal Insurance Department of the China Banking and Insurance Regulatory Commission was officially announced, adding 9 new "negative lists" compared with the previous ones, including the "proportion of increasing the insured amount of incremental whole life insurance". Exceeding the pricing interest rate, there is a serious risk of misleading; the design of the insurance reduction ratio of incremental whole life insurance is unreasonable; the design of additional insurance has the risk of breaking through the pricing interest rate in disguise.”
Since then, a number of "Internet celebrity" incremental life insurance products have been removed from the shelves, and many insurance companies have also made design adjustments to the products that violated regulations.
"Some companies' incremental whole life insurance is not worthy of its name, selling dog meat with a sheep's head, and annuity insurance in the name of whole life insurance, and even made a disguised investment-type insurance, using investment as a gimmick. This situation is not tolerated by the regulatory authorities. , naturally it should be taken off the shelf." Wang Guojun said bluntly.
Will it eventually be flat after a short-term explosion?
Affected by the epidemic, residents' consumption tends to be cautious, their preference for savings has increased, and short-term demand for protection-type insurance products such as critical illness insurance as optional consumer goods has weakened.
Insurance companies are also generally increasing the promotion of long-term savings products represented by life-time increments, so that their scale continues to grow.
However, incremental whole-life life insurance has the property of being just redeemed, with a long protection period, and in the period of falling interest rates, whether the yield of up to 3.5% can be sustained for a long time, and whether it will cause a crisis of interest spread loss of insurance companies, is also what insurance companies need. question of thinking.
"Many products of insurance companies are actually competing with those of banks, and they are also talking about yields. Of course, it is not impossible to talk about yields, but the more important thing for insurance companies is not to provide savings products. This is not the industry value of the insurance industry and society. The value lies." A senior insurance company person also bluntly told reporters, "The value of the insurance industry lies in providing risk protection, and it cannot compete with others for jobs."
In Wang Guojun's view, although it is a short-term explosion, in the long run, the incremental whole life insurance products will eventually return to the origin of insurance protection and tend to be dull.
The team of Liu Xinqi, chief analyst of Guotai Junan's non-banking financial industry, also believes that it is expected that the incremental whole life insurance will become a phased explosion product, and under the risk of long-term interest spread loss, the insurance company will reduce the expected income level.
"We believe that under the current background of falling interest rates, incremental whole life insurance, as a highly scarce product with guaranteed returns and long-term returns of more than 3%, is expected to be sought after by the market in the short term." Liu Xinqi said.
Liu Xinqi also emphasized, but at the same time, for insurance companies, incremental whole life insurance faces a greater risk of interest loss.
At the same time, the China Banking and Insurance Regulatory Commission is also strengthening the supervision of incremental whole life insurance products, focusing on regulating insurance companies to avoid potential risks such as misleading sales, short-term insurance, and interest rate loss.
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(At the request of the interviewee, Wang Lu is a pseudonym)
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