Dividend insurance "safety cushion" is thinning—be sure to choose products carefully.

How AI and Insurance Companies’ Investment Performance Affect Product Choices

Reporter Jiang Xin

On March 11, insurance broker Li posted a message on her social media: Fosun Prudential Life’s Zhuque version of Xingfu Jia, with a demonstrated interest rate of up to 4.25%, is also approaching delisting.

On February 6, Zhongying Life launched its first dividend product, Fu Man Jia C (Enjoyment Version), with a guaranteed interest rate of 1.25%, becoming the market’s first dividend insurance product with a guaranteed rate below 1.50%. Since then, many online intermediary platforms have sparked another wave of hype around stopping sales.

Economic Observer found that currently, many dividend insurance products with a guaranteed interest rate of around 1.75% are still available, and several joint-venture insurers have launched products with a guaranteed rate of 1.50% in the second half of 2025. The product Li mentioned on her social media offers a guaranteed rate of 1.75%. She advises clients to seize the “last train” opportunity.

Currently, several insurers are preparing to launch dividend insurance products with a guaranteed interest rate of 1.25%. This adjustment indicates that dividend insurance, once seen as a “fixed income-like” alternative, is undergoing profound change—insurers are actively lowering guaranteed returns to reduce rigid liability costs, while freeing up investment space, attempting to offset the decline in guaranteed returns with floating investment income.

As the “safety cushion” of guaranteed returns in dividend insurance thins, the attractiveness of these products will increasingly depend on the insurer’s actual investment performance.

From 2.50% to 1.25%

Li said that in March, her online intermediary platform still had many sales incentives, whereas in previous years, her focus was on recruiting new clients.

Li noted that product adjustments have created new sales opportunities. Market changes are forcing a shift in sales strategies.

In the past, Li mainly sold insurance products emphasizing “high guaranteed returns.” These products, with their promise of returns, once precisely met the financial needs of conservative investors. With guaranteed returns, insurance products satisfied many conservative investors’ financial planning needs. During periods of high interest rates and relatively stable investment environments, this model provided consumers with certainty of returns and ensured continuous premium growth for insurers.

In recent years, as the interest rates on fixed-term deposits at state-owned banks entered the “1” era, the guaranteed interest rate of dividend insurance has continued to decline—from 2.50% at the start of 2024 to 1.75%.

On February 6, Zhongying Life launched the Fu Man Jia C (Enjoyment Version) dividend product, setting the guaranteed interest rate at 1.25%. This was the first time in the insurance market that a dividend insurance’s guaranteed rate fell below 1.50%, 50 basis points below the regulatory cap of 1.75%. Several other insurers are preparing similar products, and more dividend insurance products with a guaranteed rate of 1.25% are expected to be launched.

In response, a research report from Industrial Securities pointed out that in a low-interest-rate cycle, the median yield of 10-year government bonds has fallen to around 1.80%. Insurers face investment pressure, and the average comprehensive investment yield of non-listed insurers has dropped to 2.89%. Setting a guaranteed rate of 1.25% can more effectively hedge against spread loss risks.

When demonstrating products to clients, Li found that although the long-term projected yield of dividend insurance can still reach over 3.50%, its yield structure has changed: from the previous “high guaranteed + low floating” to now “low guaranteed + high floating.” This shift means salespeople need to guide clients to lower their expectations for fixed returns and instead re-evaluate the value of dividend insurance from an investment logic and asset allocation perspective.

Now, when promoting dividend insurance products, Li proactively shares insurers’ solvency and investment data with clients and prefers to recommend insurers with high dividend realization rates.

A life insurance practitioner pointed out that the decline in the cost of capital preservation on the asset side has created space for insurers to allocate more to equity assets and pursue higher yields.

Divergence in Investment Returns Among Insurers

In the future, the actual yield of dividend insurance will depend more on the “floating part,” i.e., the insurer’s investment returns and dividend realization rate. In other words, the actual yield of dividend insurance will be more directly linked to the insurer’s cross-cycle investment management ability.

So, how are insurers’ investment returns currently?

Economic Observer found that there are significant differences in investment performance among insurers. According to their Q4 2025 solvency reports, among non-listed insurers disclosing comprehensive investment yields, some have negative yields, while others reach as high as 11.64%. Over half of insurers have comprehensive investment yields between 1.70% and 4.30%.

Since dividend insurance typically involves long investment cycles, the stability of insurers’ long-term investment capabilities is especially critical. Data shows that 47% of insurers have an average comprehensive investment yield above 5% over the past three years. Notably, joint ventures like Tongfang Global Life, Zhongying Life, Lujiazui Guotai Life, China Netherlands Life, and Fosun United Health Insurance have performed well, with yields exceeding 7%. China-Continent Life and Heng An Standard Life also have three-year average yields above 6%.

According to regulatory requirements on dividend levels, the proposed dividend payout rate must be justified if it exceeds the insurer’s past three-year average financial investment yield and comprehensive investment yield, especially if the dividend reserve is negative or the policy is less than three years old, or if the proposed dividend surpasses the industry’s average financial yield over the past three years.

Economic Observer found that nearly 20 insurers had a three-year comprehensive investment yield below 4%, with five life insurers (Dajia Pension, Huagui Life, Haibao Life, Junlong Life, Huahui Life) averaging less than 3%. Some products still maintain relatively high expected yields.

Investment return rates are a key factor influencing dividend realization. However, consumers should note that the dividend realization rate is the ratio of the dividends actually paid to policyholders to the projected dividend benefits. A higher rate does not necessarily mean higher actual returns. When the projected interest rate is lowered, insurers find it easier to meet dividend commitments. Therefore, consumers should look beyond appearances and focus on the insurer’s stable investment ability when choosing products.