At the end of the year, it is estimated that many insurance salesmen will tell you about dividend insurance.
They all boast that their products are the best, but how to choose?
As the saying goes, the layman looks at the liveliness, and the insiders look at the doorway.
It makes sense for the dividend insurance to turn red, but there are still a lot of particularities when applying for insurance, and it is easy to step on the pit if you don't pay attention to it!
In order to help you better understand and choose participating insurance, let's talk about some common misunderstandings about buying participating insurance today.
What is Participating Insurance?
To put it simply, it means that in addition to the guaranteed income written into the contract, the insurance company will also pay a non-guaranteed expected return, which is called a dividend.
The original intention of participating insurance** is to share profits between the insurance company and the policyholder.
In 1762, the then famous Fair Life was established in London, England. William Morgan, the actuary of Fair Life and the first actuary in history, conducted an actuarial assessment of the company's business and found that the higher premiums charged to policyholders earlier led to a large surplus in the company's operating business.
He believes that it is unfair for the policyholder to make so much profit from the insurance company, so he tries to "return" part of the insurance company's operating profits to the policyholder in a variety of ways.
This part of the "returned profits" is what we often call "dividends".
Dividend insurance was introduced to China in 2000. Although the proportion has dropped from 90% at the peak to 50% today, the participating insurance products of various insurance companies are still the main focus.
The pit of dividend insurance
When you buy a participating insurance, the insurance company's sales will show you a benefit presentation table.
It is generally composed of the cash value of the product + dividends.
As we all know, the cash value is written into the contract and is fixed, and you will definitely be able to get it.
However, there is no guarantee for dividends.
Then, we have to have a psychological expectation: the dividend of the policy in the current year is likely to be 0....
So, don't be dazzled by the mid-range bonus fans on the demo table
While the benefits of participating insurance are tempting, you must be able to withstand a certain amount of volatility and account for the worst-case scenario.
If it is acceptable, try to choose a large insurance company product with a high and stable historical dividend fulfillment ratio.
The average return on investment in the past 5-10 years, the higher the number, the better.
But you don't have to worry too much, it's hard to get 0 dividends.
Why?Let's look at the scale of the insurance company, invest in high-speed rail, bridges, subways...In the long run, these projects are guaranteed to make money.
Again, the company's shareholders also want to make money!According to the regulations, participating insurance policies are required to distribute at least 70% of the distributable surplus to policyholders.
Here is a misunderstanding to be corrected, the distributable surplus ≠ the profit of the insurance company, and also ≠ the profit of the participating insurance project, but only the distributable part of the latter's profit.
Only when the customer has money to earn, the boss can eat meat!
With the dual functions of protection and investment, the dividend insurance is good, but the price is not cheap.
Compared to a product that only provides protection, the premium of a participating insurance plan will also be more expensive.
It's about twice as expensive.
Many people have already completed the insurance before they understand the various potential problems of participating insurance. Within a few years, I found that the policy income had not risen to my expectations, and I did not have enough patience to wait and surrender the policy in a hurry.
It is also because they have listened to the misleading sales of insurance companies, thinking that the return on investment of participating insurance is fast and can be surrendered at any time.
As everyone knows, surrender can only refund the cash value of the policy in the corresponding year.
Before the principal is recovered, you need to bear the risk of loss of principal.
Before buying insurance, be sure to think about when you will use it in the future!This is important!
Calculation of the income of participating insurance
Take a hot-selling participating insurance on the market as an example:
It can be seen that no matter which payment method, the guaranteed return is very low, and the long-term IRR is at 22%-2.3%.
Even if you live to the age of 100, the cash value is only times the premium.
However, after adding the dividend income, the IRR of the policy for 30 years is as high as 359%, and by the time the age of 100, the cash value is up to 10 times the total premium.
To know, 3For products in the first echelon during the 5% predetermined interest rate period, the highest IRR can only reach 3A little more than 4%.
In addition, this product can also be attached to a universal account with a minimum guarantee of 2%.
If you have spare money in hand, you can add it regularly, up to 20 times the premium of the main insurance;If you choose to add from time to time, there is no maximum upper limit, which is equivalent to achieving additional insurance in disguise.
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Participating insurance although the predetermined interest rate is 25%, but the expected return can exceed 45%。
The lower limit is in the middle, but the upper limit is very high.
In addition, the regulator stipulates that insurance companies must publish the fulfillment ratio of dividends every year, and there are only two interest rates for dividend demonstrations.
Nowadays, the operation of participating insurance is becoming more and more standardized and transparent, and it is still worth investing