The annual insurance ‘Opening Red’ season has arrived again, often referred to as the ‘Double 11’ of the insurance industry. During this period, many insurers aggressively promote savings insurance products.
However, this year is significantly different: many companies have shifted their focus from ‘fixed-income products with universal accounts’ to ‘dividend insurance with universal accounts.’ If an agent recommends such a product, be cautious—the returns they claim may be misleading, and impulsive purchases could lead to significant losses. 1. 2025 Opening Red: Cases of Deception Already Reported Recently, a promotional PPT for an insurer’s Opening Red product was exposed online, claiming a ‘15% annualized return in the second year,’ which is utterly unrealistic. In reality, the policy’s cash value in the second year is only slightly over 530,000, far below the premium paid, making the ‘annualized’ claim baseless. The PPT also included prohibited terms like ‘deposit’ and ‘principal.’ Another online post revealed a family member had purchased a ‘guaranteed 5% return’ savings insurance for 1.2 million, questioning potential pitfalls. Given that the current dividend insurance assumed interest rate is only 2%, a ‘guaranteed 5%’ is clearly misleading, likely due to agents presenting uncertain dividends as guaranteed. Such misleading practices are expected to increase. Some agents lack integrity, while others, unfamiliar with dividend products due to the sudden shift from fixed-income offerings, hastily promote them after minimal training. Historically, dividend insurance has been a major source of complaints, accounting for nearly half of all sales misconduct cases in 2018 regulatory data. With assumed interest rates declining, dividend insurance’s ‘guaranteed floor with potential upside’ may become a dominant product. However, during this transition, consumers must remain vigilant against deceptive practices. 2. Dividend Insurance Performance: A Review of 5 Major Insurers Products compared include: – China Life: Xinyi Fengnian – Ping An Life: Yuxiang Jinyue 2025 – Taikang Life: Xinxiang Shijia – Taiping Life: Guohong No. 1 – CPIC Life: Xinfu Xiangban (Premium Edition) Except for Xinyi Fengnian (a pension annuity), all are whole-life insurance products. Xinfu Xiangban (Premium Edition) is not an Opening Red product, but its dividend performance is relevant for comparison due to insurer-specific factors.The product details are as follows:
Key findings: – In terms of guaranteed returns, Xinfu Xiangban (Zhenxiang Edition) performs best, reaching 1.70% in the 40th year, while Xinyi Fengnian and Xinxiang Shijia are lower at 1.52% and 1.59% respectively. – For illustrated returns, Xinfu Xiangban (Zhenxiang Edition) remains the top performer, achieving 2.75% in the 40th year. From these yield rates, we can deduce that all products use a conservative illustrated interest rate of 3.5%. Assuming an illustrated rate of 3.5% and a predetermined rate of 2%, the maximum dividend illustration rate would be (3.5%-2%)*70%=1.05%. The actual guaranteed yield of 1.5%~1.7%, plus 1.05%, falls within the 2.55%~2.75% range, matching the products’ illustrated yield range. Under the 3.5% illustrated rate, the maximum dividend illustration yield is 3.05%=2%+1.05%, aligning with regulatory caps that limit major insurers’ actual dividend payouts to 3.1%. This conservative approach prevents unrealistic customer expectations, as using higher illustration rates (e.g., 4.5%) would result in low realization rates (~30%), similar to this year’s performance. Note: Xinxiang Shijia and Guohong No.1 only distribute interest rate differentials, while Yuxiang Jinyue 2025 and Xinfu Xiangban (Zhenxiang Edition) can distribute both interest and mortality differentials, providing additional income sources. However, illustrated returns don’t reflect actual performance. We should also examine insurers’ historical dividend realization rates and investment capabilities. III. How do major insurers’ participating policies actually perform? Established insurers with longer track records in participating policies typically offer hundreds of products each. For comparison, we analyzed 5-year dividend realization rates, excluding products sold for less than 5 years or without active policies during this period. Different policy vintages have varying realization rates; we focus on recent vintages to match current regulations. Major insurers show minimal variation in realization rates across products, so we use averages as statistically meaningful references. Key observations: – China Life, Ping An Life, and Taikang Life primarily sell cash dividend products. – CPIC Life and Taiping Life offer significant proportions of sum-assured dividend products. Generally, sum-assured dividends have lower liquidity but potentially higher long-term yields than cash dividends, though specific product terms determine actual performance.Based on the dividend fulfillment rate data, Taiping Life and Taikang Life have performed relatively well. Except for the impact of the industry’s “dividend insurance cap policy” in 2024, their annual averages have generally remained at or above 100%.
Taiping Life, in particular, has disclosed its 10-year cumulative fulfillment rate: 90% for cash dividends and 98% for sum assured dividends, demonstrating strong performance. The 10-year cumulative fulfillment rate refers to the actual cumulative payout divided by the projected cumulative yield. For example, a 90% rate means if the projected cumulative yield over 10 years is CNY 100,000, the actual payout would be CNY 90,000. Taikang Life’s dividend fulfillment rate is unique, as many of its products distinguish between longevity accounts and personal accounts. The longevity account fulfillment rate is particularly impressive, with some annual averages exceeding 150%. To qualify for a longevity account, the total premium must meet Taikang’s retirement community entry threshold, such as CNY 3 million. Beyond fulfillment rates, the investment capabilities and sustainable operations of these companies are also critical, as they determine the stability of dividends. Key metrics are summarized below: In terms of shareholder background, apart from Ping An Life and Taikang Life (private enterprises), the other three companies have state-owned or central enterprise backing. All five companies excel in solvency, with comprehensive risk ratings of A or higher, ensuring reliable ongoing operations. Regarding investment performance, Taiping Life and Taikang Life stand out, with average comprehensive investment returns of 4.78% and 4.05% over the past three years, respectively. This aligns with their high dividend fulfillment rates. The other three companies average just over 3%. However, these figures still lag behind top-tier dividend insurance providers like Sino-British Life, which boasts an AA risk rating, a 5.46% average comprehensive investment return over three years, and industry-leading dividend fulfillment rates. In summary, if you’re considering dividend insurance from these major insurers, Taiping Life and Taikang Life products are worth prioritizing. Taiping Life offers many sum assured dividend products with attractive long-term projected returns, while Taikang Life is better suited for high-budget individuals with retirement community needs. 4. Final Notes While dividend insurance is likely to become mainstream in the future, it is still in its early stages. Not only are many consumers unfamiliar with these products, but even insurance agents often lack clarity, leading to potential pitfalls. Remember: dividends are not guaranteed. Stay vigilant and remind family members to protect their finances.
