Bank-Insurance Channel "Variations": Why 1.75% Dividend Insurance Became the "Star Product" on Bank Shelves? | New Year Wealth Management Research

Everyday Economic News Reporter | Tu Yinghao Everyday Economic News Editor | Liao Dan

“Recommend you take a look at 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 portion with floating returns, with a simulated interest rate of 3.3% to 3.4%.” In mid-March, at a branch of a joint-stock bank in Shanghai, wealth management manager Zhang Yuan enthusiastically recommended a five-year dividend insurance product to a client.

What’s a good investment product to buy with idle funds? Recently, a reporter from “Everyday 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. 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 “Everyday Economic News.” On one hand, deposit interest rates are currently low, and dividend insurance products with guaranteed minimum interest rates are attractive in the wealth management market; 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 bring higher intermediary business income to banks.

Dai Zhifeng, Director of the China Securities Research Institute, told the reporter that under the background of continuous decline in deposit interest rates, insurance is easier to be packaged as a “locked-in term, locked-in expectations, and reduced perception of volatility” allocation tool, making it more resonant with clients’ allocation decisions at the beginning of the year. Wealth management differs; after net asset value (NAV) reform, clients are more sensitive to short-term fluctuations, and sales depend more on holding experience and market environment.

Banking and Insurance Variations: Dividend Insurance Takes Center Stage, Universal Life Insurance Cools Down

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

“Periodic insurance products usually have a term of ten years or more, which is more suitable for young people. They can serve as a mandatory savings tool, supporting 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 when recommending insurance products.

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

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

Shanghai Bank’s wealth managers also recommend insurance products, but they prefer dividend products with a guaranteed minimum interest rate plus 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 don’t reach the simulated rate, as long as the dividend payout rate is around 20% to 30%, it’s still higher than 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 part calculated at 1.45%, with a simulated 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 with dividends, the simulated rate can reach 3.75%. Based on a 145% dividend realization rate last year, clients can expect an actual return of about 3.5%.

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

During the visits, it was found that universal life insurance, which also features floating returns like dividend insurance, 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 certain and floating returns,” said a bank wealth manager.

In recent years, universal life insurance once became an important asset allocation target for residents, thanks to its higher returns compared to bank deposits and wealth management products, and was seen as a “high-interest alternative.” However, with continued interest rate cuts, the rate ceiling of universal life products has been falling, and many products’ settlement rates have reached the guaranteed minimum, greatly reducing their appeal as wealth management products.

Underlying Reasons: Seasonal Factors Dominate

Why are insurance products so heavily promoted by banks at the start of the year? Industry insiders attribute this to the continuation of the “Opening Red” seasonality.

Dai Zhifeng believes that savings-type insurance, especially dividend insurance, naturally tends to concentrate efforts at the beginning of the year. This is because insurance sales have a long-standing “Opening Red” operational inertia, with new business targets for the year often broken down and allocated in the first quarter. Product supply, marketing resources, training, and channel incentives tend to favor this period, making frontline managers more inclined to promote insurance first.

Unlike the routine of insurance sales “Opening Red,” wealth management products are more like continuous operation items. Their scale changes more due to reallocation of existing clients and market fluctuations, not solely based on what the branch promotes at the start of the year. From the perspective of retail banking clients, what they care about most is not necessarily higher nominal returns, but whether the returns are easy to understand, whether fluctuations are 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 interviews reveal that, besides seasonality, 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 increase 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, provides both scale and value growth.

Second, the increasing reallocation demand for deposits maturing in 2026 injects new momentum into bancassurance. Industry experts believe that these 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, with growth rates of 91%, 59%, and 28%.

Third, insurance institutions are intensifying their strategic deployment in the bancassurance market for dividend insurance products. As insurance market product interest rates adjust, ordinary life insurance products’ guaranteed interest rates have 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, Postdoctoral Fellow and Professor of Applied Economics at Peking University, said that the “guaranteed plus floating dividends” structure of dividend insurance can reduce the rigid liability pressure on insurance companies, retain long-term yield potential for clients, and increase the flexibility of insurance funds’ asset allocation. In a low-interest-rate environment, the “low guarantee, strong floating” product model is becoming an important industry trend.

Industry Outlook: Continued Downward Pressure on Interest Rates Accelerates Product Transformation

Compared to the booming sales of bancassurance products, the scale growth of wealth management products from the “Opening Red” wealth management season this year has been somewhat sluggish. On-the-ground visits show that 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 and hybrid products, with 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 in the market did not increase but decreased. Although the industry saw a recovery in February, the growth in the first two months remains modest compared to previous years.

Dai Zhifeng analyzed for “Everyday Economic News” that February’s wealth management market was not “completely strong” but rather a “recovery after a weak January.” This recovery was mainly driven by three factors:

First, the seasonal disturbance subsided, and funds flowed back. January’s wealth management scale did not show the usual “Opening Red” surge, mainly because at the start of the year, banks’ on-balance sheet deposits, loan issuance, pre-holiday preparations, and residents’ liquidity arrangements temporarily squeezed wealth management inflows. By February, with the Spring Festival effects waning, some of the 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 February rebound was primarily in cash management and fixed income products, indicating that the market’s recovery was driven by low-risk funds seeking a slightly better alternative to deposits—still relatively stable. This does not conflict with the idea that insurance sales are favored by frontline managers: insurance targets longer-term, nominally certain funds, while wealth management products attract funds that are flowing back after the holiday and seeking stable allocation.

Third, wealth management companies have actively reduced fees and improved client experience. Since the beginning of the year, wealth management institutions 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 some of this money was deposited into fixed deposits or used to buy wealth management products. “Of course, some people also choose to buy insurance products.”

It is worth noting that the 1.75% guaranteed rate dividend insurance faces downward pressure, prompting banks’ sales staff to seize the window to increase promotion efforts. A wealth manager revealed that insurance companies are expected to launch a batch of dividend insurance products with guaranteed rates below 1.75%. Another joint-stock bank wealth manager also said that the guaranteed rate of dividend insurance products may continue to decline in the future.

Zhu Junsheng pointed out that the decline in dividend insurance guaranteed rates will, on one hand, accelerate the industry’s product structure transformation, and on the other hand, indicate 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 in the future, 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 “interest rate-driven” to “asset management capability-driven” competition. From the perspective of insurance sales, future market focus will gradually 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)