Against the backdrop of persistently declining reference assumed interest rates for life insurance products and bank deposit rates fully entering the "1% era," a fierce competition for residents' long-term funds is accelerating. According to statistics from Guosheng Securities, nearly 38 trillion yuan in residents' time deposits will mature in the first quarter of 2026. The traditional wealth management strategy of "locking in returns by extending deposit terms" is becoming ineffective, forcing massive amounts of capital to seek new destinations. On the insurance front, although the reference assumed interest rate for life insurance products has been lowered to 1.89%, these products are highlighting their allocation value during the interest rate downtrend due to their ability to lock in long-term returns and provide guarantees, making them a major recipient of the "deposit transfer" wave. Multiple insurance companies have achieved rapid growth in premium scale during the new round of "First Red" campaigns, accelerating their efforts to capture the residents' long-term wealth management market during the window of massive deposit maturities.
The assumed interest rate for life insurance products appears to be bottoming out and stabilizing. Recently, the Insurance Association of China convened the Q4 2025 regular meeting of the Expert Advisory Committee on Interest Rate Research for the Life Insurance Industry. Industry experts expressed opinions on the assumed interest rates for life insurance products, concluding that the current reference rate for ordinary life insurance products is 1.89%. The downward adjustment of the reference rate to 1.89% reflects the deepening reform of the life insurance pricing mechanism. Long Ge, Deputy Director of the Innovation and Risk Management Research Center at the University of International Business and Economics, pointed out that this change objectively reflects the long-term trend of declining interest rates. The core logic is that the assumed interest rate of insurance products must be linked to market-based interest rate indicators such as the 10-year government bond yield and the LPR. This regulatory move aims to prevent interest spread loss risks for the industry and represents a routine adjustment based on the economic environment. Looking back at the four quarters of 2025, this indicator was 2.34%, 2.13%, 1.99%, and 1.90% respectively, showing a clear downward trajectory. Wang Guojun, a professor at the School of Insurance at the University of International Business and Economics, noted that the consecutive five adjustments lowering the reference rate from 2.34% at the beginning of 2025 to the current 1.89% represent the gradual manifestation of a longer-term trend. Although the reference rate for ordinary life insurance products has declined for five consecutive quarters, the magnitude of the single-quarter decrease has narrowed from 21 basis points in the first half of 2025 to just 1 basis point in this fifth adjustment. The reduction in the reference rate has significantly narrowed, shifting from "large strides" in 2025 to "fine-tuning" in early 2026. Chen Hui, Director of the China Actuarial Science Laboratory at the Central University of Finance and Economics, analyzed that this narrowing is due to the relative stability of its anchor, the "10-year government bond yield," which has recently remained around 1.8%. According to the mechanism linking the assumed interest rate to market rates and allowing for dynamic adjustments, the upper limit for the assumed interest rate of ordinary life insurance was lowered from 2.5% to 2% after August 31, 2025. Looking ahead to the first half of 2026, experts generally believe it is highly unlikely that this rate will be further reduced. As stipulated by the National Financial Regulatory Administration's notice issued in January 2025, a reduction in the upper limit is only triggered if it exceeds the reference value by more than 25 basis points for two consecutive quarters. Currently, the upper limit for ordinary life insurance is 2.0%, which is only 11 basis points above the reference value of 1.89%, far from touching the 25-basis-point "red line." This implies that the upper limit for insurance product assumed interest rates will most likely remain unchanged in the first half of 2026, and will not enter a range below "2%" in the short term. Chen Hui analyzed that, from the perspective of the entire financial industry's safety, the 10-year government bond yield will be maintained at its current level without significant fluctuations. Ge Yuxiang, a non-bank financial analyst at Zhongtai Securities, also pointed out that based on calculations, if subsequent government bond yield curves, 5-year time deposit rates, and the 5-year LPR remain at current levels, the simulated reference value by the end of 2026 would be 2%, matching the current maximum assumed rate (2%) for ordinary life insurance products on sale. Therefore, the possibility of an adjustment to the upper limit for new products in the medium term is not high.
Resident savings are accelerating their flow into life insurance. Against the backdrop of the continuously declining reference assumed interest rate for life insurance, while consumers' return expectations for new policies have decreased, this has not diminished the appeal of insurance as a long-term wealth management tool. In the first quarter of 2026, China will face a concentrated maturity of nearly 38 trillion yuan in residents' time deposits. With bank deposit rates entering the "1% era," this massive amount of capital urgently needs to find a "safe haven" capable of locking in long-term returns. Data calculated by Guosheng Securities shows that the scale of medium- to long-term deposits maturing for the residential and corporate sectors in 2026 will reach 58.3 trillion yuan, an increase of 5.6 trillion yuan compared to 2025. Among these, maturities in the residential sector amount to 37.9 trillion yuan, the highest level in nearly five years. In terms of timing, these deposits are highly concentrated in the first quarter of 2026, accounting for over 60% of the total. This enormous pool of funds faces severe reallocation pressure upon maturity. Against the backdrop of continuously lowering bank deposit rates, residents' previous strategy of locking in returns by extending deposit terms is failing. Currently, the 5-year time deposit rates at many major state-owned and joint-stock banks have fallen to between 1.3% and 1.8%, with some large-denomination certificates of deposit even experiencing "supply cuts." Guosheng Securities notes that if maturing deposits are reinvested in time deposits of the same original term, the interest rate for 5-year time deposits maturing in 2021 would see a drastic reduction of approximately 145 basis points. This significant interest rate gap is forcing resident savings to spill over more rapidly, seeking alternative solutions with long-term stable returns. The unprecedented scale of concentrated deposit maturities is resonating with the new "First Red" season in the insurance industry, accelerating the transfer of resident funds from the banking system towards insurance products that offer stronger guarantees and long-term savings attributes. According to media reports, as of January 8th, in terms of individual agent channel regular-premium business, many insurers have already surpassed tens of billions in premium scale, with China Life Insurance, Ping An Life Insurance, CPIC Life Insurance, and New China Life Insurance all achieving double-digit year-on-year growth.
Dividend insurance has become the main driver of new business for insurers. From the product perspective, consumer preference is shifting. Unlike previous years which primarily promoted traditional fixed-return products, the market focus in 2026 has quickly turned towards dividend insurance and other products offering "guaranteed returns + floating dividends." A Guotai Junan Securities teleconference pointed out that for some companies, the sales proportion of dividend insurance has even reached 100%, making it the primary driver of new business in the industry. A Tianfeng Securities research report indicated that, while the guaranteed return of dividend insurance is not significantly different from traditional insurance, its floating dividend component offers consumers greater potential upside. Against the backdrop of improving risk appetite, it provides an investment model that "offends and defends well." To adapt to this demand, changes are also occurring on the supply side. An increasing number of insurance companies are beginning to separate their old and new dividend insurance accounts, implementing more optimized asset allocation for new accounts to enhance the certainty and attractiveness of dividend realization. Commenting on this trend, Wang Guojun pointed out that during an interest rate downtrend, the risk of interest spread losses for traditional insurance products intensifies. Dividend insurance can enhance operational stability through its "risk-sharing" mechanism, making it a good choice for insurers. He believes that the increasing proportion of dividend insurance in a low-interest-rate environment is an industry norm. Regulatory guidance through policies like "dynamic dividend adjustment" and "tiered sales" aims to improve product sustainability, with leading insurers possessing strong investment capabilities having a particular advantage. Long Ge believes that the popularity of dividend insurance reflects the industry's proactive move away from the operational logic of "rigid redemption." Driven by regulatory guidance and insurers' risk control needs, the "guaranteed + floating" model has become the mainstream product structure, representing a fundamental shift in operational logic. Under the dual pressures of increased market volatility and declining interest rates, the role of insurance as the "ballast stone" in household asset allocation is further solidified. Long Ge emphasized that the unique appeal of insurance products lies in the deterministic structure of "guaranteed returns + floating dividends," which can lock in interest rates long-term to hedge against downside risks and provide a stable option with principal safety—features not offered by wealth management products and funds. In the current environment of declining rates and market fluctuations, being a "ballast stone" means that insurance serves as the core cornerstone in household wealth, providing ultimate principal safety, the ability to lock in long-term returns across cycles, and enabling certain financial planning.
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