Investment-linked insurance products and universal life policies were popular
in the first quarter of this year in China as their premiums rose rapidly
boosted by rising returns from stock market investments.
Data from the China Insurance Regulatory Commission showed that
investment-linked insurance premiums surged 177.21 percent year-on-year to 3.11 billion yuan (US$405.4 million) in the
first quarter of this year and universal life insurance premiums rose 60 percent
to 18.31 billion yuan.
The booming stock market siphoned capital from the insurance sector. Those
who invested in insurance products also hope to benefit from the bullish market,
said an industry insider, adding that investment-linked life insurance is a good
choice under the current market conditions.
Investment-linked insurance is a plan that offers life insurance
protection as well as investment opportunity to the policyholder. The benefits of the
plan are directly related to the performance of the investment-linked funds that
are chosen by customers in accordance with their risk preference.
Its rate of return is higher than that of participating
policies, which sell well in a bearish stock market with its three percent rate
of return, and has gotten the attention of insurers.
Since the beginning of 2007, foreign and joint
venture insurance companies including American International Assurance,
AEGON-CNOOC and Skandia-BSAM have submitted applications to open
investment-linked insurance accounts. Chinese insurance companies such as China
Life and Union Life Insurance said they would soon present their new
investment-linked insurance products.
The insurance regulator warned the general public of the risks related to
investment-linked and universal life insurance policies such as misleading
information during sales promotions when releasing their results in the first
Investment-linked and universal life insurance policies are
mid-and-long-term investment products as their initial cost is rather high and the
policyholder can not redeem their investment, unlike mutual fund investors who can redeem
their shares each business day, the insider said.
He added that customers should
buy investment products according to their risk preference.
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