"Revenue down 35%?" Insurance capital products launch "last train promotion"

Insurance institutions and bank sales channels are launching a series of "sprint battles" for insurance sales.

"XX product may be taken off the shelves soon, purchase quickly."

"If you buy when the future guaranteed interest rate drops to X%, the returns may decrease by 35%."

Once these statements are made, they quickly create an inexplicable sense of "anxiety" among some traditionally "risk-averse" investors, prompting them to take action.

This is actually the "hidden logic" behind the surge in sales of certain insurance products linked to guaranteed interest rates over the past two years.

For domestic retail investors, when the yield on 10-year government bonds and the interest rates on medium to long-term bank deposits are generally below 2%, and in contrast, the guaranteed interest rates of savings-type insurance products are significantly higher than 2%, it is natural to see a wave of strong sales.

Moreover, the "speculation on suspension of sales" rhetoric further stirs investor emotions.

But is such an arrangement really reasonable?

"Last Train Marketing"

Zhitang found that on a large internet financial platform, a page for a life annuity insurance product from China Life displayed the following warning:

"This product may be taken off the shelves soon, purchase quickly. If you buy when the guaranteed interest rate drops to 2.0%, the returns may decrease by 35%."

The page for savings-type insurance products on the same internet platform is even more "anxiety-inducing."

Upon opening the page, a pop-up window automatically appears (as shown below), indicating that "the 2.5% hot product may decrease soon."

This same page also features a news "background introduction":

Breaking news! The one-year deposit rate of state-owned banks has fallen below 1%.

And that's not all.

The platform further provides a more "anxiety-inducing" time limit. At the bottom of the above image, it states, "Only 12 days left until the product is taken off the shelves at the earliest," involving products from some small and medium-sized life insurance companies.

All these pressures are directed at the internet users browsing the page.

Why "may be taken off the shelves"?

Why is there such a "may be taken off the shelves" promotion?

First of all, the annuity insurance involved in this promotion can be simply explained as a type of "long-term savings insurance that pays out at scheduled times," meaning that customers save money as agreed, and the insurance company pays out money in the future as agreed, similar to receiving a salary monthly or annually.

The "guaranteed interest rate" mentioned earlier is the interest rate that the insurance company agrees upon with the customer in advance, which is the promised rate at the time of purchase and is not affected by changes in market interest rates after the purchase. (The "interest income" that customers receive must also deduct handling fees from the actual returns.)

Currently, there is an "unverified" rumor circulating in the market: within the next three months, the guaranteed interest rates of mainstream fixed-income savings insurance products will drop from 2.5% to 2% Following this rumor, among all fixed-income savings insurance categories, including annuity insurance, increasing amount whole life insurance (which allows for partial withdrawal and death benefit payout), endowment insurance (which combines survival and death benefits), and participating life insurance (with guaranteed interest rate + uncertain dividends), there may be a possibility of reduced returns.

Historical data shows that in 2021, 2023, and 2024, products with guaranteed interest rates of 4.025%, 3.5%, and 3.0% respectively were phased out.

How much will investors "lose"?

The "guaranteed interest rate" written in the savings insurance contract does not equal the yield that investors can actually receive.

In simple terms: the guaranteed interest rate is a "theoretical reference value" written by the insurance company in the contract, similar to the "cost price of ingredients" on a restaurant menu, but the actual dish served (the yield received) must deduct various "miscellaneous fees":

Sales commissions, management fees, protection costs, and profits retained by the insurance company.

In other words, the "guaranteed interest rate" written in the contract is akin to a yield "ceiling."

Next, let's do a simple calculation. Suppose an investor buys an annuity insurance product with a guaranteed interest rate of 2%, fails to buy at 2.5%, and makes a one-time payment of 100,000 yuan, holding it for 20 years.

After deducting the aforementioned "miscellaneous fees" (averaging around 0.5% in the industry), the actual yield is about 1.5%, resulting in approximately 134,400 yuan after rolling over in the account for 20 years.

If purchased at the 2.5% position, the actual yield after deducting "miscellaneous fees" would be 2%, leading to 148,600 yuan after 20 years.

The difference is 14,200 yuan, exceeding 10% of the investor's principal.

Will the dividend insurance rate "say goodbye" to the 2% era?

Zhi Shi Tang notes: Participating life insurance (commonly known as dividend insurance) is about to say goodbye to the 2% guaranteed interest rate era.

Taking China Life Insurance as an example, it has also indicated the possibility of lowering the guaranteed interest rate on internet sales platforms, from the current 2% to 1.75%.

This means a reduction of 25 basis points.

The yield structure of dividend insurance is slightly different from other savings-type insurance, including "guaranteed yield + floating yield," where the guaranteed yield part is written into the contract according to the guaranteed interest rate. The floating yield is distributed based on the insurance company's operating conditions.

As of now, the mainstream guaranteed interest rate for dividend insurance is 2%.

On the sales page, there is also a calculation: if dividend insurance misses the 2% guaranteed interest rate, holding it until age 70 will result in tens of thousands less (based on a one-time investment of 1 million yuan).

According to market information, the guaranteed interest rate for the dividend insurance product of Tongfang Global Life has already been reduced by 50 basis points from the market mainstream guaranteed interest rate of 2% to 1.5%.

"Speculative suspension" is unfavorable for insurance institutions

The sell-side team of Huatai Securities recently stated: The reduction of the guaranteed interest rate will effectively lower the funding costs of new policies and improve the profitability of insurance products. This kind of reduction often affects policy sales, with past characteristics often reflecting a "buy before the stop," meaning agents persuade clients to purchase older products with higher yields just before the guaranteed interest rate is about to be lowered.

This report sharply points out: Such a sales model is not beneficial for insurance institutions, as selling more high-cost "old products" during the adjustment of the guaranteed interest rate is more of a helpless move by the sales team under significant assessment pressure.

The so-called disadvantage highlights the "cost-revenue inversion pressure" faced by insurance companies, and lowering the guaranteed interest rate is beneficial for improving the performance of insurance companies.

In simpler terms: The products previously sold by insurance companies had a guaranteed interest rate of 2.5%, but the money they earned from investments (for example, buying government bonds at less than 1.8%) was simply not enough to pay clients. Now that it has been lowered to 2.0%, the performance pressure decreases accordingly.

In other words, the current "last train promotion" is more favorable for increasing the volume of sales channels