Summary of Key Points
Recently, insurance agents have started to promote the "ending of sales" again, due to a regulation that takes effect on July 1st: the upper limit on the演示 interest rate for dividend-based insurance products will be reduced from 3.9% to 3.5%. However, the demonstration interest rate is not a guaranteed benefit in the contract; it is merely an assumed figure in the product brochure. The actual dividend depends on the distributable surplus of the insurance company. The regulatory change aims to eliminate inflated profit expectations, reduce sales misrepresentation, and encourage the industry to compete based on real investment capabilities. Consumers should not rush to buy products at the last minute but should make rational decisions, prioritizing those with higher dividend realization rates.
1. Understanding the Difference Between Demonstration Interest Rate and Guaranteed Interest Rate
Many people may confuse these two terms. In simple terms:
- Guaranteed Interest Rate: This is the "minimum return" specified in the insurance contract, such as the fixed portion of returns in investment-based insurance products. Regulators have previously adjusted this rate (for example, from 3.5% to 3%), which directly affects the guaranteed benefits in the contract.
- Demonstration Interest Rate: This is an assumed figure used in the product brochure to show potential returns (available at high, medium, and low levels). This rate is not included in the contract and has no legal binding force. It serves as a guide for how much profit might be earned if investments perform well, but whether this actually happens depends on the company's actual investment earnings (distributable surplus).
The change only affects the demonstration interest rate, not the guaranteed interest rate, so existing policies are not affected.
2. Does a Reduction in the Demonstration Interest Rate Mean Less Actual Dividends?
Agents might suggest that a higher demonstration interest rate (e.g., 3.9%) results in a higher actual dividend compared to a lower one (e.g., 3.5%). However, this is misleading:
- Demonstration Interest Rate ≠ Actual Dividend: The actual dividend depends on the company's investment performance. For example, if the company earns 5% this year, it might distribute that amount as a dividend; if it earns only 2%, the dividend will be lower. The demonstration rate is just an assumption, not a commitment.
- Misleading Communication by Agents: They may wrongly suggest that a decrease in the demonstration interest rate means a reduction in actual dividends, causing anxiety. But the regulatory change simply makes the figures more realistic (given that the industry average return is around 3%), and it will not directly lead to lower dividends.
3. Should You Rush to Buy Before the “Last Minute”?
If you have idle funds for more than 10 years and are considering dividend-based insurance, compare different products. If you are just being influenced by a sales deadline, don’t act impulsively—early withdrawals can result in a loss of principal.
4. Why Are the Demonstration Interest Rates Being Reduced?
The regulators are making this change for two main reasons:
- To Prevent Misrepresentation: The previous 3.9% demonstration rates far exceeded the industry’s actual investment capabilities, leading many consumers to expect higher returns than they actually received, which often led to disputes.
- To Promote a healthier Industry: Previously, companies competed by offering higher demonstration rates, leading to excessive competition based on inflated figures. With the unified reduction in these rates, companies will have to compete on their actual investment performance and dividend realization rates, which is more sustainable for the long term.
5. How to Choose Dividend-Based Insurance in the Future
After the reduction in demonstration interest rates, consumers should focus on two key indicators when selecting products:
- Dividend Realization Rate: This is the ratio of actual dividends to the demonstrated dividends. For example, if the demonstrated dividend is 100 yuan but the actual payout is 90 yuan, the realization rate is 90%. Choose companies with an average realization rate of 80%-100% over the past 3-5 years (this information is publicly available).
- Long-Term Funds: Dividend-based insurance is suitable for funds that will not be used for at least 10 years; early withdrawals can result in a loss of principal. If you don’t have a long-term savings plan, don’t let sales tactics influence your decision.
In the future, the market will favor companies with stable investments and transparent dividend realization rates. Dividend-based insurance products will return to their core principles of providing a minimum guarantee plus realistic, variable returns, and sales misrepresentation will decrease.
Conclusion
Don’t let the anxiety created by agents’ “countdowns” influence your decisions. The reduction in demonstration interest rates does not mean lower actual dividends; it simply makes product information more accurate. If you need to invest in dividend-based insurance, check the company’s dividend realization rate and use funds that are not needed for at least 10 years. Making rational choices is the wisest approach.