Insurance-Banking Channel "Variations": Dividend Insurance with 1.75% Guaranteed Floor Becomes Banks' "Top Product"

Source: Daily Economic News Author: Tu Yinghao

“Let me recommend our best-selling products, which are essentially a mandatory savings plan that can provide good returns in the future. The minimum guaranteed interest rate for this product is 1.75%, plus a dividend component with floating returns. The projected interest rate is between 3.3% and 3.4%.” In mid-March, in the lobby of a joint-stock bank in Shanghai, financial manager Zhang Yuan was enthusiastically recommending a 5-year dividend insurance product to a client.

What’s the best product to buy with idle funds? Recently, a reporter from Daily Economic News visited several banks in Shanghai, including state-owned banks and joint-stock banks, and found that insurance products are currently the most popular category. Dividend insurance with a projected rate of 1.75% has become the flagship product promoted by all banks, mainly including dividend annuities and dividend whole life insurance.

“Currently, banks and insurance companies are increasing their promotion of dividend insurance, which is a temporary industry trend,” said Liao Zhiming, Chief Fixed Income Analyst at Huayuan Securities, in an interview with Daily Economic News. On one hand, deposit interest rates are low, and dividend insurance, which features a guaranteed minimum interest rate, is attractive in the wealth management market (Note: dividend insurance is essentially insurance, not purely financial products, but it has certain financial attributes). On the other hand, last year’s stock market performed well, and dividend insurance can show relatively attractive returns to clients. Additionally, insurance products can generate higher intermediary business income for banks.

Dai Zhifeng, Director of the China Securities Research Institute, told reporters that under the backdrop of declining deposit interest rates, insurance products are more easily packaged as “fixed-term, expectation-locked, and volatility-reducing” allocation tools, making them more resonant with clients’ investment decisions at the beginning of the year.

Cold Reception for Universal Life Insurance

Recently, a reporter visited seven banks in Shanghai, including state-owned banks, joint-stock banks, and city commercial banks. Regarding idle funds, the bank managers uniformly recommended insurance products.

“Periodic premium insurance products usually have a term of 10 years or more, making them more suitable for young people. They can serve as a forced savings tool, helping with future financial planning, such as dedicated funds for children’s education or as a supplement to future pensions,” said a wealth manager at Shanghai Pudong Development Bank.

From the perspective of asset allocation, a wealth manager at China Construction Bank believes insurance can serve as a defensive product to protect clients’ assets. “Ordinary insurance products had an interest rate of about 4.0% in 2023, and although it has now dropped to around 2.0%, it still exceeds current long-term deposit rates,” he said.

Compared to insurance, other financial products are less popular. For example, a manager at Shanghai Bank said that the main issue with large-denomination certificates of deposit is the decreasing interest rates. The highest rate for current large-denomination CDs is 1.75%, down nearly half from about 3.4% three years ago.

Shanghai Bank’s wealth managers also recommend insurance products. However, compared to the current guaranteed interest rate of 2.0% for ordinary life insurance, they prefer dividend products with a guaranteed minimum plus dividends. First, dividend insurance accounts are regulated to distribute part of the earnings as dividends. Second, choosing larger insurance companies with more established operations tends to yield more substantial dividends. Lastly, even if some products’ dividend rates often do not reach the projected rate, as long as the dividend realization rate is around 20% to 30%, it still outperforms fixed-income products.

Dividend insurance with a projected rate of 1.75% has become a popular recommendation. For example, a wealth manager at China Merchants Bank recommended a dividend annuity insurance with a guaranteed rate of 1.75%, and a floating component calculated at 1.45%, resulting in a projected rate of up to 3.2%.

A wealth manager at CITIC Bank recommended a dividend whole life insurance product with the same guaranteed rate of 1.75%. Including dividends, the projected rate can reach 3.75%, based on a 145% dividend realization rate last year, with actual client yields around 3.5%.

Additionally, several other banks’ wealth managers recommended similar dividend insurance products.

During visits, the reporter found that universal life insurance, which also features floating returns, is not recommended by wealth managers. “I don’t recommend buying universal life insurance; few can achieve the expected returns. It’s better to buy dividend insurance that offers both guaranteed and floating returns,” said a bank wealth manager.

The reporter noted that in recent years, universal life insurance once became an important asset allocation target for residents, thanks to its higher yields compared to bank deposits and wealth management products, and was seen as a “high-interest alternative.” However, as interest rates continued to decline, the interest rate ceiling of universal life products has fallen, with many products’ settlement rates reaching the guaranteed minimum, greatly reducing their appeal.

Seasonal Factors Dominate

Why are insurance products heavily promoted at the start of the year?

Dai Zhifeng believes that savings-type insurance, especially dividend insurance, naturally tends to be concentrated at the beginning of the year. This is because insurance sales have a strong “opening success” inertia, with the first quarter often serving as a pre-decomposition of annual new policy targets. Product supply, marketing resources, training, supervision, and channel incentives tend to favor the first quarter, making frontline managers more inclined to promote insurance products first.

Unlike the routine of insurance sales “opening success,” the scale of wealth management products is more influenced by reallocation of existing clients and market fluctuations, not solely by branch promotions at the start of the year. From the perspective of retail banking clients, customers are usually more concerned about whether the returns are easy to understand, whether the volatility is tolerable, and whether the holding experience is stable. Insurance products are easier for clients to understand as “using liquidity to exchange for certainty,” making them more likely to be sold successfully.

Multiple sources indicate that, besides seasonal factors, banks’ strong push for dividend insurance sales is driven by several reasons.

First, for banks, in the context of narrowing interest spreads and pressure on traditional profit models, insurance agency sales can effectively increase intermediary income, becoming an important profit growth point, aligning with their urgent need to boost non-interest income. For insurance companies, under the policies of “reporting and operating together” in bancassurance and the standardization of commission systems, the bancassurance channel, with its extensive branch network, deep customer base, and high customer acquisition efficiency, has brought both scale and value growth.

Second, the increasing reallocation demand for deposits maturing in 2026 injects new momentum into bancassurance. Industry experts believe that low-risk preference funds may flow into high-security, yield-flexible bancassurance products. Guojin Securities estimates that the incremental funds in bancassurance channels in 2026 will show a “high first, then low” pattern: January, Q1, and the whole year will see incremental funds of 305.7 billion yuan, 509.4 billion yuan, and 1.115 trillion yuan, respectively.

Third, insurance institutions are intensifying their strategic deployment in the bancassurance market for dividend insurance products. As product interest rates in the insurance market adjust, the projected interest rate for ordinary life insurance has fallen to 2.0%. During visits, it was found that the main products in the bancassurance market have shifted to dividend insurance with a projected rate of 1.75%. Professor Zhu Junsheng, a postdoctoral fellow in applied economics at Peking University, said that the “guaranteed return + floating dividend” structure of dividend insurance can reduce the rigid liability pressure on insurance companies, retain long-term return potential for clients, and improve the flexibility of insurance funds’ asset allocation. In a low-interest-rate environment, the “low guaranteed, strong floating” product model is becoming an important industry trend.

Interest Rate Still Under Downward Pressure

Compared to the booming sales of bancassurance products, the scale growth of wealth management “opening success” at the start of this year has been somewhat sluggish. From the reporter’s visits, the promotion of wealth management products at offline branches is not very vigorous.

The 2025 China Banking Wealth Management Market Annual Report shows that by the end of last year, the outstanding scale of bank wealth management products reached 33.29 trillion yuan. The product structure is dominated by fixed income, with expanding mixed products, and asset allocation shifting toward more public fund and bank deposit investments. The average yield of products has fallen below 2% for the first time. According to industry data, in January 2026, the total outstanding wealth management product scale decreased rather than increased. Although the industry saw some recovery in February, the growth in the first two months remains modest compared to previous years.

Dai Zhifeng analyzed for Daily Economic News that the wealth management market in February was not “completely rebounding” but rather a “recovery after a weak January.” This recovery was driven by three main factors:

First, the withdrawal of seasonal disturbances. January’s wealth management scale did not show the usual “opening success” because early-year bank on-balance sheet deposits, loan disbursements, pre-holiday preparations, and liquidity arrangements all temporarily squeezed the capacity of the wealth management market. By February, as the Spring Festival effects waned, some short-term and liquid funds that had flowed out earlier naturally returned, leading to a “redemption and subscription” recovery rather than a shift in sales channels.

Second, the returning funds mainly flowed into low-volatility wealth management products rather than high-risk ones. The February market recovery was mainly driven by cash management and fixed income products, indicating that the market’s rebound was more about low-risk funds finding a relatively stable outlet—“slightly better than deposits but still relatively safe.”

Third, wealth management firms actively reduced fees and improved client experience. Since the beginning of the year, wealth managers have been doing two things: lowering costs to increase net returns and optimizing product structures through cash management, fixed income, and moderate multi-asset strategies to enhance product attractiveness.

Regarding the February market rebound, Liao Zhiming believes that many companies distributed year-end bonuses in February, prompting residents to deposit these funds into fixed deposits or invest in wealth management products.

It is worth noting that the 1.75% projected interest rate for dividend insurance faces downward pressure, prompting bank sales staff to seize the window to promote more aggressively. Some wealth managers revealed that insurance companies are expected to launch a batch of dividend insurance products with projected rates below 1.75%. Another wealth manager from a joint-stock bank said that the projected rate for dividend insurance may continue to decline in the future.

Zhu Junsheng pointed out that the decline in the projected interest rate of dividend insurance will, on one hand, accelerate the industry’s product structure transformation, and on the other hand, reflect a fundamental change in the competition logic of the life insurance industry. Previously, competition among life insurance products heavily relied on interest rate levels, but moving forward, the industry will focus more on comprehensive capabilities, including long-term investment ability, asset allocation, product service quality, brand strength, and stable management. In other words, the life insurance industry is gradually shifting from a “rate-driven” to an “asset management capability-driven” competition model. From the perspective of insurance sales, future market focus will increasingly shift from guaranteed interest rates to indicators reflecting long-term investment ability, such as dividend realization rates. (Intern Cheng Xuebing also contributed to this article)