Following the central bank’s reserve requirement ratio and interest rate cuts, the LPR has decreased by 0.1%. Major banks such as ICBC, ABC, BOC, and CCB have also lowered deposit rates, with the one-year deposit rate now at a historic low of 0.95%.
The insurance “assumed interest rate” is determined based on market rates. The latest “assumed interest rate research value” published by the Insurance Association of China is 2.13%, which is highly likely to be implemented. As a result, the returns on savings insurance will further decline, while premiums for critical illness insurance will increase. If you have idle funds to manage, it is advisable to take advantage of the current window of opportunity while high-yield products are still available. If the assumed interest rate does drop to 2%, how significant will the impact be? Which products are still worth considering? Let’s examine: 1. How significant is the impact if the assumed interest rate drops to 2%? Over the past three years, the insurance industry has experienced two assumed interest rate reductions: – August 1, 2023: Reduced from 3.5% to 3.0%. – September 1, 2024: Reduced from 3.0% to 2.5%. Consequently, savings insurance returns have continued to decline, while critical illness insurance premiums have become more expensive. If the rate drops to 2%, what will the specific impact be? We selected products from the “Deep Blue Insurance Gold List” for comparison to estimate the effects of the reduction, starting with the simplest whole life insurance. 1. Whole Life Insurance: Returns may shrink. It is evident that a lower assumed interest rate leads to reduced returns. For example, by the 20th year, the cash value decreases from 463,000 to 416,000, and then to 380,000. However, the reduction amount also diminishes over time—the first reduction was 47,000, while the second was only 36,000. This is fundamentally related to the compound interest calculation formula, as shown below: As the interest rate decreases, the gap after the same number of compounding periods also narrows. In other words, based on a total premium of 250,000, if the assumed interest rate drops by another 0.5%, the return on whole life insurance may decrease by less than 36,000. For smaller amounts, the impact will be minimal, but for larger sums, the difference could be significant. 2. Protection Insurance: Premiums may increase. This includes three common types: adult critical illness insurance, child critical illness insurance, and term life insurance, as shown in the table below: It is clear that for both adult and child critical illness insurance, lower assumed interest rates result in higher premiums. Some may notice that as the assumed interest rate decreases, the premium increase for critical illness insurance becomes more pronounced. For example, the Darwin series saw a 170 yuan increase after the first rate reduction and a 395 yuan increase after the second.There are two main reasons for this trend:
In recent years, the incidence of critical illnesses has risen significantly, leading to more comprehensive coverage in critical illness insurance, such as “coverage for mild and moderate conditions even after a major claim.” These enhancements drive up premiums. Many insurers have discontinued online critical illness insurance products, eliminating price competition and further increasing premiums. If these factors stabilize and the assumed interest rate is lowered again, the premium increase for critical illness insurance is expected to be similar to the previous adjustment, likely around 400–500 RMB. From a commercial perspective, higher premiums may reduce sales, prompting insurers to streamline coverage and control price hikes. Additionally, here are updates on two other products: Term Life Insurance: Prices fluctuate minimally, sometimes even decreasing, due to shorter coverage periods and reduced mortality rates in recent years. Term Critical Illness Insurance for Children: For example, 30-year coverage remains stable at around 600–700 RMB. Furthermore, million-yuan medical insurance and accident insurance are priced without assumed interest rates, so they remain unaffected. In summary, no official announcement has been made regarding an assumed interest rate cut. Clarity will emerge in early July when the research values are released. However, early signs of a rate reduction are apparent. For instance, certain products, including FOSUN Bund Starr Fortune Family Longevity Edition Whole Life Insurance (Participating), FOSUN Bund Starr Fortune Family 2024 Whole Life Insurance (Participating), and FOSUN Bund Starr Phoenix Edition Whole Life Insurance, will be suspended from intermediary channels starting June 8. Therefore, if you find a suitable product, consider purchasing it promptly. 2. Which products are still worth considering? Compared to fluctuations in deposit and government bond rates, adjustments to savings-type insurance products lag by 2–3 months. To secure long-term rates or suitable coverage, early preparation is advisable. Below are our top recommendations based on thorough comparisons: 1. Standard Increasing Whole Life Insurance Ideal for long-term value growth, pre-marital asset protection, or family inheritance planning. Zeng Duo Duo 8: Exceptionally High Guaranteed Returns Offered by Haibao Life, Zeng Duo Duo 8 delivers outstanding returns. For example, a 30-year-old female paying premiums over 5 years will see the cash value exceed the total premiums paid by the end of the payment period. If held longer: At age 40: The cash value increases by nearly 50,000 RMB, with a compound IRR of 2.16%.
At age 50: The cash value increases by 130,000 yuan, with a compound IRR of 2.34%. At age 60: The cash value nearly doubles, with a compound IRR of 2.40%… It is important to note that the theoretical upper limit for ordinary increasing life insurance is currently 2.5%. This product achieves 2.45%, truly earning the title of the “ceiling” for similar products. Zeng Duo Duo 8 Haibao Life Insurance Life Insurance Effective insured amount increases by 2.5% annually High long-term returns View review These returns are clearly stated in the contract and can be locked in for life. Even if bank deposit rates drop to 0 in the future, they will remain unaffected. If you have idle funds that you won’t need in the short term and are concerned about declining interest rates, allocating a portion to this product for long-term stable returns is a wise choice. For those with limited budgets, consider Guardian 2.0 (Premium Edition) by Aixin Life Insurance. The returns are slightly lower, but the minimum investment is only 5,000 yuan, making it suitable for budget-conscious individuals. Guardian 2.0 (Premium Edition) Aixin Life Insurance Life Insurance Effective insured amount increases by 2.5% annually Minimum investment of 5,000 yuan View review If company reputation is a priority, consider Pacific Life’s Fu You Yu (2024), which offers competitive returns among major insurers. 2. Dividend Savings Insurance Dividend insurance is more suitable for those willing to sacrifice some certainty for higher potential returns. Currently, the most popular product in the market is Zhongyi Life’s Yi Sheng Zhong Yi Premium Edition (Dividend). Yi Sheng Zhong Yi Premium Edition (Dividend) Zhongyi Life Insurance Life Insurance Effective insured amount increases by 2% annually Dividend on insured amount View review Its guaranteed return is close to 1.8%, and the projected dividend return can reach 3.1%. While not the most outstanding, its historical dividend performance and company strength are exceptional. For example: – Over 20 years of experience in dividend insurance, longer than most companies. – All dividend insurance products before 2023 achieved a minimum dividend fulfillment rate of 100%. – 15 consecutive years of profitability and 7 quarters with AA/AAA ratings. – Backed by CNPC and Generali (ranked 5th in global insurance brand value). We have published a detailed analysis of this company. Click here to view >>> The other three dividend insurance products also have unique features, with some focusing on guaranteed returns and others on dividend returns. The right product varies by individual. 3. Annuity Insurance Annuity insurance helps create passive income by converting cash into a steady stream of cash flow. Two common types are: – Pension annuity insurance: Provides fixed payments starting at a specified age (e.g., 60) and continues for life, ideal for supplementing retirement income.Another type is the quick-return annuity insurance, which focuses on early payouts. For example, you can start receiving payments from the 5th year with attractive early returns, making it suitable for asset appreciation.
Future Fortune (Plan 3): High payout amounts with lifelong cash value. Future Fortune (Plan 3) is currently a leading product in terms of payout amounts. If you want to supplement your retirement cash flow with minimal investment, this product should be a priority. Star Ocean Winner (Phoenix Edition – Plan 3): Doubling annuity payouts with long-lasting cash value. Star Ocean Winner (Phoenix Edition – Plan 3) is a unique annuity product where payouts increase with age. Star Ocean Winner (Phoenix Edition) Fosun Baodexin Life Insurance Annuity Insurance Guaranteed payout for 10/15 years Minimum investment of 10,000 RMB Payments continue until age 105 View Review If you are concerned about inflation or rising medical expenses in old age, this mechanism is highly practical. For example, a 30-year-old investing 250,000 RMB over 5 years would receive: – Ages 60-69: 13,000 RMB annually, supplementing cash flow as retirement savings are still substantial. – Ages 70-79: 26,000 RMB annually, exceeding fixed-payout products to cover higher retirement expenses. – Age 80+: 39,000 RMB annually, among the highest payouts available, with lifelong benefits and no burden on family. This product also maintains lifelong cash value. For instance, at age 90, after receiving 825,000 RMB in payouts, the policy still has 192,000 RMB in cash value, yielding 3.06%. Yang Duoduo No.7 (Green Mountain Edition – Plan 2) offers lower payouts before age 80 but higher afterward, with long-term cash value. At ages 90/100, lump sums of 337,000 RMB and 250,000 RMB are available, with yields up to 3.2%, far exceeding the 2.5% cap. The choice depends on individual needs. For personalized comparisons, consult a professional planner. Zeng Duoduo No.7 (Incremental Edition): Balancing retirement and appreciation. Zeng Duoduo No.7 (Incremental Edition) is an annuity product that meets both retirement and appreciation needs. It provides stable cash flow: For example, after investing 250,000 RMB, annual payouts range from 9,000 RMB to 36,000 RMB until age 106, ensuring financial security in retirement.Zeng Duoduo No.7 (Increasing Version)
Harbin Life Insurance Annuity Insurance Fast-growing cash value High payout amount View evaluation It is considered a dual-purpose product because, like increasing life insurance, it offers long-term cash value with rapid growth. For a 5-year payment plan, the cash value exceeds the total premiums paid by the end of the payment term. With a maximum yield of nearly 3.2%, far exceeding the 2.5% cap of ordinary increasing life insurance, it also provides flexibility for partial withdrawals. Therefore, if you are planning for retirement but worry about needing the funds before retirement, this product is an excellent choice. Early withdrawals won’t result in losses, and holding until retirement ensures a stable and substantial lifelong cash flow. Fuxiang Niannian: Payouts start from the 5th year Fuxiang Niannian is a fast-return annuity insurance underwritten by Harbin Life Insurance, with payouts starting from the 5th year and continuing for life. As demonstrated in the example, after the final premium payment, you can receive ¥6,430 annually starting the following year, lasting a lifetime. Moreover, its cash value remains around ¥250,000 throughout the policy term. This means the premiums you paid stay largely intact in the policy, while you receive ¥6,430 annually. The more you invest, the higher the payout. It offers a long-term compound interest rate of approximately 2.4%. If you have idle funds and prefer the stable returns of savings insurance with flexibility, this product is ideal. Manhao Life is another excellent fast-return annuity insurance, underwritten by Pacific Life Insurance, a reputable brand with a long-term compound interest rate of 2.32%. As an internet product, it offers convenient enrollment, with a minimum investment of ¥5,000 and coverage up to age 80. It’s perfect for those who prefer well-known brands. 4. Critical Illness Insurance Rankings We have compiled rankings for both adult and child critical illness insurance products. The listed products are as follows: Due to time constraints, we won’t detail these products here. For in-depth reviews and analysis, please click the link: [Shenlanbao Rankings] June Critical Illness Insurance Rankings—Another Strong Product Added! III. Final Notes With the dropping from 4.025% to 2.5%, many users lament not having purchased more earlier. The interest rate cut is something we all understand—soon, even 2.5% will be considered a ‘high’ rate. By the third quarter, we may fully enter a new era of low interest rates. Rather than regretting later, seize the current window to lock in rates now!
