the decline in guaranteed interest rates has led to a surge in dividend-paying insurance products being actively promoted by agents and banks, with newly launched products accounting

Cailian Press reported on October 14 (by reporter Gao Ping) that “dividend-paying insurance business has recently become a key focus in insurance sales, while various insurance companies are also strengthening staff training in this area.” During a recent visit to the insurance market by Cailian Press reporters to investigate the status of insurance product sales, an industry insider told Cailian Press.

During the investigation, Cailian Press learned that dividend-paying insurance has become the preferred recommendation of several insurance agents and bancassurance account managers. One bancassurance account manager frankly admitted to Cailian Press that before the reduction of the预定利率 (preset interest rate) for life insurance products at the end of August, there was a wave of high sales; after the reduction of the preset interest rate, the sales of products inevitably suffered some impact. However, contrary to the trend, after the adjustment of the preset interest rate, dividend-type products saw only a 0.25% reduction, which was relatively small, making them a better choice for consumers.

A senior executive of a large insurance company told Cailian Press that the new round of pricing interest rate adjustments has led to a short-term decline in the competitiveness of savings-type products, making sales more difficult. However, it also narrowed the gap between the preset interest rates of participating policies and traditional policies, enhancing the relative advantages of participating policies, thereby promoting the optimization of the overall business structure and being beneficial for managing interest margin risk and achieving high-quality business development in the long term.

Dividend-paying insurance gaining popularity, highly recommended by agents and bancassurance account managers

During interviews and investigations, compared to other insurance products, several insurance agents and bancassurance account managers were found to be more inclined to recommend dividend-paying insurance to clients.

A bancassurance account manager told Cailian Press that after the reduction of the预定利率 (preset interest rate) for life insurance products, the interest rate advantage of traditional life insurance products weakened, while dividend-paying products, which only decreased by 0.25%, became a better option for current consumers due to their smaller reduction.

“After the reduction of the预定利率 (preset interest rate), our company’s recent focus has been on dividend-paying insurance business and personnel training,” said a representative from an insurance brokerage firm directly to Cailian Press.

Participating insurance is a type of insurance contract that distributes non-guaranteed dividends to policyholders. Policyholders and insurers ‘share’ the profits generated from operating the insurance business according to a certain ratio, allowing clients potential upside through a product design principle combining insurance benefits and dividend returns, offering both offensive and defensive capabilities.

Several insurance industry insiders told Cailian Press that after the reduction of the预定利率 (preset interest rate), dividend-type products only decreased by 25 basis points, further narrowing the gap with the upper limit of the预定利率 (preset interest rate) of traditional life insurance products to 25 basis points. Coupled with the elasticity of floating returns, the relative competitive advantage of these products has been further enhanced.

A large insurance company also stated in an interview with the Caixin reporter that the new round of pricing interest rate adjustments presents both opportunities and challenges for participating insurance. Specifically, it narrows the gap between the guaranteed interest rates of participating insurance and traditional insurance, making the relative advantage of participating insurance more prominent.

According to the introduction, the insurer has done a significant amount of work in advancing its participating insurance business. The aforementioned official noted that, in response to changes in the macro environment and regulatory guidance, their company is focusing on liability flexibility, diversification of profit sources, and asset diversification. At the same time, they are leveraging digitalization and ecosystem collaboration to build long-term competitiveness.

This is mainly reflected in three aspects: First, improving the supply of floating-return products, completing the product structure transition, and formulating product strategies under the backdrop of a reduced guaranteed interest rate. Second, deepening the focus on health insurance to promote the diversification of profit sources. Third, continuously matching long-term government bonds on the investment side, solidifying net investment yields, reducing duration gaps, strengthening asset-liability linkage, and refining tiered benchmark management of investment returns and liability costs to enhance profitability.

Amid uncertainty, dividend realization rates of participating insurance show significant divergence.

When it comes to participating insurance, the dividend realization rate has drawn significant attention. The dividend realization rate of participating insurance is a key indicator measuring the gap between the actual dividends distributed by insurers and those projected at the time of sale. It reflects the insurer’s ability to deliver on the demonstrated interest rates and provides insights into the insurer’s investment performance.

According to a summary by the Caixin reporter, as of now, many insurers have released the 2024 dividend realization rates for their participating insurance products. Overall, the dividend realization rates vary significantly. For instance, some participating insurance products from Dingsheng Life Insurance achieved dividend realization rates exceeding 100% in 2024, while others were around 50%.

Additionally, information from the official website of Hengan Standard Life Insurance shows that several of its participating insurance products had a dividend realization rate of 100% in 2024, with some even surpassing 200%. Huahui Life Insurance, however, previously announced that based on the actual operating conditions of its participating insurance business in 2024, no dividends would be distributed for its participating products that year. Among the six participating insurance products disclosed by Huahui Life Insurance, the highest cumulative dividend realization rate over the past three years was 84%, while the lowest was 40%.

Regarding issues related to the dividend realization rates of participating insurance, the Caixin reporter sent interview outlines to several insurance companies but received responses from only a few. Among them, Huahui Life Insurance replied, “Please refer to the relevant content disclosed on our company’s official website.”

An employee of an insurance company explained to the Caixin reporter that the benefit projections of participating products reflect expectations about the long-term market economic environment at the time of sale. The actual dividend levels are influenced by changes and fluctuations in the current market economic environment and may differ from benefit projections. As a result, the dividend realization rate may be higher or lower than 100%.

The employee further noted that in previous years, there were cases where policies sold with high benefit projections resulted in dividend realization rates below 100%. She emphasized that the level of product dividend realization does not necessarily represent the actual level of distributed dividends. For consumers, when choosing participating insurance products, factors such as long-term investment capability, historical dividend realization, transparency in product design, and alignment with personal needs should also be considered.

“Due to the uncertainty of returns, compared with traditional fixed-income products, the sales difficulty for participating insurance products with floating returns will be greater. This is also the reason why various companies are conducting intensive training. Sales personnel must help customers better understand the value of participating insurance,” a life insurance company executive told Caixin Media. The executive also emphasized that the product can be evaluated from multiple dimensions, such as the company’s long-term investment return performance, overall profitability, and core indicators like solvency adequacy ratio.

Driven by necessity, several insurers saw significant growth in participating insurance premiums in the first half of the year.

In fact, expanding the sales of participating insurance in a low-interest-rate macroeconomic environment has become an important measure for insurers to implement cost reduction, quality enhancement, and efficiency improvement. The year 2025 is also considered a pivotal year for the industry to promote the transformation of its product structure toward floating-return products represented by participating insurance.

An internal source from an insurance company told Caixin Media that from the perspective of product structural transformation, the industry is shifting from scale expansion to value cultivation, with an increasing proportion of floating-return products such as participating insurance and universal life insurance. Insurance companies tend to expand their business share of participating insurance and universal life insurance, actively reduce guaranteed interest rates for new products, lower rigid liability costs, reduce reliance on interest rate spreads, and balance customer returns with company risks through a ‘guaranteed + floating’ model.

During this year’s mid-year earnings conference, executives from several insurers mentioned accelerating the transition to participating insurance, particularly noting significant progress since the second quarter. Gong Xingfeng, President and CFO of New China Life Insurance, introduced that in the first half of the year, New China Life Insurance clarified the positioning and function of participating insurance within the product system covering the entire customer lifecycle; simultaneously, they built up sales teams’ knowledge base and selling skills for participating insurance and revamped the training system for these products. Additionally, they developed a new model of bundled sales and multi-dimensional promotion for participating insurance.

The latest interim report data from leading insurers also confirms the growth trend of participating insurance scale. For instance, Ping An’s participating insurance premium in the first half of 2025 was RMB 49.92 billion, representing a year-on-year increase of approximately 41%; New China Life Insurance’s participating insurance premium in the first half of the year reached RMB 18.269 billion, marking a year-on-year growth of 24.9%.

Moreover, in the first half of 2025, the new premium income from participating insurance underwritten by China Pacific Life Insurance (CPIC) amounted to RMB 10.128 billion, surging nearly 14 times year-on-year, with participating insurance accounting for 42.5% of new premium income. New China Life Insurance’s first-year premium for long-term participating insurance reached RMB 4.627 billion, skyrocketing by 231,250% from RMB 2 million in the same period last year. China Life’s interim report also showed that its participating insurance experienced rapid growth, accounting for over 50% of the first-year regular premium in the individual insurance channel, becoming a key pillar of new premium income.

Looking ahead to the second half of the year, an internal source from an insurance company told Caixin Media that with the adjustment of预定利率, the proportion of participating insurance is expected to gradually increase. Their company will also treat participating insurance products as mainstream offerings and deepen the development of such products.

According to incomplete statistics from Caixin Media based on data from the China Insurance Association, since the second half of this year, 497 new life insurance products have been launched, of which 214 were participating insurance products, accounting for 43%, compared to less than 40% in the first half of the year. Additionally, among 298 annuity insurance products launched since the second half of this year, 109 were participating insurance products, representing 36.58%.

Some insurance industry insiders pointed out that the long-term competitiveness of participating insurance ultimately depends on the insurer’s investment return capability. Under the current new policy framework, leading insurers enjoy prominent advantages, while smaller insurers see their room for attracting customers through high dividends significantly compressed, compelling them to enhance their investment capabilities.