Definition of dividend insurance: dividend insurance refers to the life insurance products that the insurance company distributes the surplus of its actual operating results superior to the pricing assumption to the insured in a certain proportion. Origin of dividend insurance: 1776 The British Fair Life Insurance Company initiated dividend insurance. In North America, more than 80% of products have dividend function. In Germany, dividend insurance accounts for 85% of the life insurance market. Dividend insurance accounts for as much as 90% in Hong Kong. The operating principle of dividend insurance: the risk that dividend insurance originates from the change of fixed interest rate and market return rate of the policy will be shared by the insured and the insurance company for a long time to come. For example, during the period of 1994-1999, the interest rate of the policy was generally around 8- 10%, because the bank deposit at that time was also the same interest rate. What does this predetermined interest rate of the policy mean? It means that the insurance company must pay the insured according to this interest rate, which definitely requires the return on investment of the insurance company to be higher than this interest rate. But in fact, the bank cut interest rates seven times in a row, which led to the insurance company's investment return rate not reaching the original 8- 10%. Assuming that the return on investment is 3.5%, it is very unfavorable for insurance companies to make up the difference themselves. Suppose the return on investment in the later period is 15%, which is very unfavorable to customers. Therefore, in order to deal with this problem, the risks caused by interest rate fluctuations are shared by both parties, which leads to the concept of dividend insurance. It means that there is no dividend when the investment income is not good, and there is dividend when it is good. In order to avoid the fluctuation of dividends in different years, insurance companies generally smooth dividends in different years. Dividend source: death difference benefit: life insurance with death as insurance liability, the actual mortality rate is less than the scheduled mortality rate. Spread: refers to the fact that the actual investment interest rate of an insurance company is higher than the predetermined interest rate, and the difference between the two is the spread. Fee difference: refers to the surplus generated when the actual operating expenses of an insurance company are lower than the expected operating expenses. Three kinds of income constitute distributable income, 70% of which is distributed to customers. How to receive the bonus: Cash receipt: Pay the bonus to the customer in cash and receive it every year. Cumulative interest: Dividends are retained in the insurance company from the date of payment to compound interest and paid when the contract is terminated or the applicant applies. Premium payment: Dividends are used to pay the due premiums. If there is any balance, it will be handled by cash collection, accumulated interest and purchase of paid insurance. Compensation increase: according to the age of the insured at that time, the premium will be paid in one lump sum with the bonus, and the insurance amount will be increased according to the same contract conditions. Cumulative interest calculation method of dividends: compound interest, simple interest: 10000 yuan× (1+6 %× 70) = 52000 yuan, compound interest: 10000 yuan× (1+6%) 70 = 59000 yuan.
Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.