Why do we say this?
After evaluating the latest batch of fixed-rate life insurance products, we uncovered two truths that everyone should know. Let’s dive in. 1. The first truth: The returns are disappointingly low. Before the products were discontinued at the end of August, we spoke with product managers from several insurers and were among the first to access the new product details. Currently, the highest-yielding fixed-rate life insurance product offers only a 1.7% return over 10 years and 2.4% in the long term. Such a sharp drop is hard to accept, even for industry insiders, let alone ordinary customers. It’s unreasonable to recommend a 2.5% product right after a 3% product was discontinued. Let’s move on. 2. The second and most overlooked truth. You can still buy products with an expected return of 3.5%, so there’s no need to settle for 2.5%. However, due to information silos, most people are unaware of this. We recently worked with a client who purchased a policy yielding 3.5%. Here’s how it performed: At age 30, she invested ¥50,000 annually for 5 years in a 3.5% product. By the 10th year: Her account balance grew to ¥306,000, with an actual return rate of 2.54%. In the long term, it could reach ¥1 million or even ¥2 million, with an expected return exceeding 3.7%. This product is a participating life insurance policy. Click the card at the end for a 1-on-1 consultation. The high returns are achieved by combining a guaranteed base return (written into the contract) with annual dividends. Even if we only consider the guaranteed return (2.3%), it outperforms many fixed-rate products offering 2.5%. Including dividends, the return easily surpasses 3%, far exceeding current fixed-rate products. If you’re looking to invest in savings insurance this September, consider participating life insurance for wealth growth. 3. Pros and cons of participating insurance. No product is perfect, so here are two critical reminders.Firstly, its dividends are uncertain and non-fixed.
In the past two years, due to the poor market environment, some insurance companies did not earn much, resulting in a lower dividend fulfillment rate of only 30%+. Customers could expect a yield of around 3%. However, some performed very stably, with most products distributing dividends at 100% of the expected rate, allowing customers to anticipate a yield of 3.9%. Therefore, to select a truly good dividend insurance product, it is no longer sufficient to focus solely on the trio of [yield/partial withdrawal/speed of exceeding premiums]. We must also consider whether the insurer’s historical dividend fulfillment rate is achievable and the strength of its investment capabilities. Secondly, due to its outstanding returns, it has attracted regulatory attention. It is expected to be completely withdrawn from the market by the end of September, leaving only a few weeks for consideration. Fourth, recommended products. Given the complexity of dividend insurance products and the extensive documentation required for comparison, to simplify the selection process, we have compiled the results of recent product evaluations and screenings into the following table. We recommend focusing on the following three products: Even without dividends, these three products offer a guaranteed return of around 2.2% in the medium to long term, similar to current ordinary endowment policies. If dividends are 100% fulfilled, the long-term returns of these products could reach around 3.6%, significantly higher than current ordinary endowment policies. To choose among these products, consider their features and benefits as follows: Xing Fujia: Higher guaranteed returns than other products, with higher expected returns under the same 100% fulfillment rate. Finally, we remind you that after next month, the predetermined interest rate for dividend insurance will decrease by 0.5%, potentially leading to even lower actual returns. If you are considering purchasing dividend insurance, we recommend reviewing the above products before September 30 and acting promptly to secure higher guaranteed returns.
