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

Source: Daily Economic News Author: Tu Yinghao

"Recommend you take a look at our best-selling products, which are essentially mandatory savings that can yield good returns in the future. The minimum guaranteed interest rate for this product is 1.75%, plus a dividend portion with floating returns, with a demonstration rate of 3.3% to 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 a good 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 1.75% guaranteed rate 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 efforts to promote 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 currently low, and dividend insurance products with guaranteed rates are attractive in the financial 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 also generate higher intermediary business income for banks.

Dai Zhifeng, Director of the China Securities Research Institute, told reporters that under the background of declining deposit interest rates, insurance products are more easily packaged as "fixed-term, expectation-locked, and perceived as less volatile" allocation tools, making them more resonant with clients’ allocation 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. For idle client funds, the 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 mandatory savings tools, 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 SPD Bank when recommending insurance products.

From the perspective of asset allocation, a wealth manager at China Construction Bank believes that 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 2.0%, it still exceeds current long-term deposit rates," he said.

Compared to insurance, sales of 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.

The bank’s wealth manager also recommended insurance products, but he prefers dividend products with a guaranteed minimum and dividends over ordinary life insurance with a 2.0% guaranteed rate. First, dividend insurance accounts are regulated to distribute part of the earnings as dividends. Second, choosing larger insurance companies with more established operations can lead to more substantial dividends. Lastly, even if some products’ dividend rates often do not reach the demonstration rate, as long as the payout rate is around 20% to 30%, it still outperforms fixed-income products.

Dividend insurance with a 1.75% guaranteed rate 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 portion calculated at 1.45%, with a demonstration rate of up to 3.2%.

A wealth manager at CITIC Bank recommended a dividend whole life insurance product, with a guaranteed rate of 1.75%, and a demonstration rate of 3.75%, based on a dividend realization rate of 145% last year, with actual client yields around 3.5%.

Additionally, many 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. "Don’t buy 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 financial products, and was seen as a "high-interest alternative to savings." However, as interest rates continued to decline, the interest rate ceiling of universal life products has been falling, 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 rush" inertia, with new business targets for the year often broken down and allocated in the first quarter. Product supply, marketing resources, training, supervision, and channel incentives all tend to favor the first quarter, making frontline managers more inclined to prioritize insurance products.

Unlike the routine of "opening rush" in insurance sales, the scale of financial products is more affected by reallocation of existing clients and market fluctuations, not solely by what branches promote at the start of the year. From the perspective of retail banking clients, what they care about most is not necessarily higher nominal yields, but 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, bancassurance 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" and standardized commission systems, bancassurance channels—thanks to their extensive branch networks, deep customer bases, and high customer acquisition efficiency—bring both scale and value growth.

Second, the increasing reallocation needs of bank deposits by 2026 inject new momentum into bancassurance. Industry experts believe that low-risk preference funds may flow into safer, 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 guaranteed interest rate of ordinary life insurance products 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 guaranteed rate of 1.75%. Zhu Junsheng, a postdoctoral fellow and professor of applied economics at Peking University, said that the "guaranteed plus 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 guarantee, strong floating" product model is becoming an important development direction for the industry.

Interest rate still under downward pressure

Compared to the booming sales of bancassurance products, the scale growth of wealth management "opening red" at the start of this year has been somewhat sluggish. From 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, dominated by fixed-income products, with an expanding mix of hybrid products. Asset allocation shifted toward increasing holdings of public funds and bank deposits, and the average product yield first fell below 2%. According to industry data, in January 2026, the total outstanding wealth management product scale actually declined, despite a slight recovery in February, the growth in the first two months remains modest compared to previous years.

Dai Zhifeng analyzed to Daily Economic News that the wealth management market in February was not "completely rebounding," but rather "recovering after a weak January." This recovery was mainly driven by three factors:

First, the fading of seasonal disturbances allowed funds to flow back. January’s wealth management scale did not show the usual "opening rush," mainly because at the start of the year, banks’ on-balance-sheet deposits, loan issuance, pre-holiday preparations, and resident liquidity arrangements all temporarily squeezed the capacity of the wealth management market. By February, the influence of the Spring Festival weakened, and some short-term and liquid funds that had flowed out earlier naturally returned, leading to a "redemption and subscription" recovery rather than a channel shift.

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

Third, wealth management firms actively reduced fees and improved client experience. Since the beginning of the year, these firms have been lowering costs 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, and residents either deposited these funds into fixed deposits or used them to buy wealth management products.

It is worth noting that the downward pressure on the guaranteed rate of 1.75% dividend insurance is prompting bank sales staff to seize the window to increase promotion efforts. Some wealth managers revealed that insurance companies are expected to launch a batch of dividend insurance products with guaranteed rates below 1.75%; other managers from joint-stock banks also indicated that future guaranteed rates for dividend insurance may continue to decline.

Zhu Junsheng pointed out that the decline in the guaranteed rate of dividend insurance will, on one hand, accelerate the industry’s product structure transformation, and on the other hand, signify 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, brand, and stable operation. 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)