Data from the People's Bank of China shows that in the first half of 2026, household deposits increased by 7.58 trillion yuan, a year-on-year decline of 3.19 trillion yuan in new deposits; deposits at non-banking financial institutions rose by 4.65 trillion yuan, a year-on-year increase of 2.1 trillion yuan. CICC estimates that in 2026, residents are expected to allocate an additional 2 trillion to 4 trillion yuan of activated capital into non-deposit investment areas. Among these outflow funds, participating insurance is becoming one of the stable choices.

During the Mid-Autumn Festival holiday, after meeting with an insurance agent three times, Ms. Lin signed a 300,000 yuan single-premium participating insurance policy. "Last December, a 500,000 yuan three-year fixed deposit of mine matured, and when I went to renew it, I found the interest rate had dropped from 2.60% to 1.50%," Ms. Lin said while pulling up a mobile banking screenshot to explain how she placed the matured funds: 200,000 yuan into bank wealth management products, 100,000 yuan into bond funds, and 200,000 yuan into a participating whole life insurance with increasing coverage. "The guaranteed interest rate is 1.75%, plus a projected dividend rate of 3.50% — even if dividends are discounted, it still beats fixed deposit returns," she said.

Ms. Lin's choice is not an isolated case. Data from the People's Bank of China shows that in the first half of 2026, household deposits increased by 7.58 trillion yuan, a year-on-year decline of 3.19 trillion yuan in new deposits; deposits at non-banking financial institutions rose by 4.65 trillion yuan, a year-on-year increase of 2.1 trillion yuan. CICC estimates that in 2026, residents are expected to allocate an additional 2 trillion to 4 trillion yuan of activated capital into non-deposit investment areas. Among these outflow funds, participating insurance is becoming one of the stable choices.

Single-Premium Policies Gain Popularity: Seeking One-Time Placement

According to Ms. Lin, the participating insurance product she purchased takes the form of whole life insurance with increasing coverage. The product uses a 1.75% guaranteed interest rate as a floor, meaning the effective insured amount increases at a compound annual rate of 1.75% starting from the second policy year, written into the contract, while also offering a maximum projected dividend rate of 3.50%. "This money won't be needed urgently. Although it takes six years to break even, the product has a guaranteed interest rate that can lock in long-term rates. At the same time, the policy can pay dividends. Although I don't know how long-term dividend realization will perform, the guaranteed rate alone can exceed deposit rates," Ms. Lin said, explaining why she ultimately chose the single-premium method. Previously, she had never allocated wealth-management-type insurance products, but since 2025, friends around her have frequently mentioned participating insurance.

This is also a new feature of the participating insurance market in the first half of the year. Financial reports show that in the first half of this year, China Life's individual insurance channel single-premium first-year premiums increased from 167 million yuan to 998 million yuan, an increase of nearly five times. A broker at an insurance intermediary company said many clients have maturing large-denomination certificates of deposit or wealth management funds and are unwilling to pay in installments, hoping to complete the allocation in one lump sum. To this end, many insurers have launched products to meet customer demand, which is also related to insurance companies' sales strategies. The broker noted that in the first half of this year, regulators required a reduction in the projected interest rate for participating insurance products, and many insurance companies carried out product switches at the end of June and early July, which brought a small sales surge.

Ms. Lin's experience reflects the development of the participating insurance market over the past two years. As deposit rates decline, the guaranteed interest rates of insurance products have begun dynamic adjustments linked to market rates, referencing long-term rates such as the loan prime rate for terms of five years or more, the benchmark five-year fixed deposit rate, and the 10-year government bond yield. Products exceeding the assessed guaranteed interest rate must be taken off shelves. Traditional fixed-income products have become less competitive, while the appeal of participating insurance has risen significantly.

The Insurance Association of China stated at its second regular press conference of 2026 that, according to peer exchange data, from January to June 2026, original insurance premium income from participating insurance reached 1,012.6 billion yuan, a year-on-year increase of 94.4%. Participating insurance accounted for more than 35% of total premiums at life insurance companies, setting a new high since 2015. Looking at listed insurers with larger customer bases, their participating insurance growth is even more pronounced. In the first half of 2026, participating insurance accounted for 97.8% of Taiping Life's first-year regular premiums for long-term insurance; at Ping An Life, participating insurance accounted for more than 90% of new business; at New China Life, participating insurance accounted for more than 90% of first-year premiums for long-term insurance; and at CPIC Life, participating insurance rose to 55.5% of new business.

"Currently, deposit customers are no longer fixated on fixed terms. When renewal gifts are no longer enough to move customers, insurance with guaranteed returns is actually easier for customers to accept," a wealth manager at a joint-stock bank told reporters. Although sales commissions have been affected by the "reporting and execution integration" policy, participating insurance products have formed a substitution effect due to growing customer demand, and everyone is still willing to sell participating insurance products.

Projected Interest Rate Cut: From High Illustrations to Emphasizing Fulfillment

For consumers, in a low-interest-rate environment, participating insurance offers not only guaranteed returns but also the imaginative potential of dividend benefits. For insurance companies, participating insurance is likewise an effective weapon for coping with low-interest-rate cycles, and its development is closely tied to changes in the interest rate market. The first rise of participating insurance in the Chinese market came after the People's Bank of China cut interest rates repeatedly in the late 1990s. In April 2000, China Life launched its first participating insurance product in Shenzhen. This product was born against the backdrop of the one-year deposit rate falling rapidly from 11% in 1996 to 2.25% in 2000. To address industry-wide losses from interest rate spreads, regulators lowered the guaranteed interest rate to 2.50%, reducing the competitiveness of traditional insurance products, so insurance companies shifted their attention to developing floating-return products. As a result, for a long period, participating insurance was a mainstream product in the market, with premiums accounting for more than 70% of total premiums in the life insurance industry.

The shift occurred after 2013, when regulators raised the guaranteed interest rate for traditional insurance from 2.50% to 3.50%, greatly narrowing the gap with market interest rates at the time, and sales of traditional insurance with fixed returns began to rise. Zhu Junsheng, a postdoctoral researcher and professor of applied economics at Peking University, said in an interview with reporters that the guaranteed interest rate of participating insurance can be set lower, effectively compressing an insurance company's initial liability costs, while dividend distribution can adjust cost expenditures. The returns that participating insurance gives customers are divided into two parts: one is guaranteed return, reflected in the guaranteed interest rate; the other is excess return, reflected in the dividend portion exceeding the guaranteed interest rate. According to relevant regulations, insurance companies must distribute a certain proportion (no less than 70%) of the surplus from actual operating results exceeding assessment assumptions to policyholders. The amount distributed depends on the insurance company's profitability, including excess investment returns and insurance operating results. The better the profit, the higher the dividend; and vice versa.

This means that from the perspective of wealth allocation, the actual rate of return of participating insurance depends more on the "floating portion," namely the insurer's investment return level. This also tests an insurance company's cross-cycle investment management capability. After comparing multiple products, Ms. Lin ultimately chose a relatively large insurance company. According to regulatory requirements, starting July 1, 2026, the upper limit for the projected interest rate of participating insurance was officially lowered from 3.90% to 3.50%. Most subsequently launched products were consistent with the policy Ms. Lin purchased, with projected interest rates around 3.50% and guaranteed interest rates mostly between 1.50% and 1.75%.

A research report by Orient Securities shows that lowering the return display assumptions on the sales side helps reduce customers' excessive expectations for future floating dividends and guides product competition from "high illustrations" to "emphasizing fulfillment." To standardize the development of participating insurance, in late September, the Insurance Association of China released three model clauses: Model Clauses for Whole Life Insurance (Participating), Model Clauses for Endowment Insurance (Participating), and Model Clauses for Annuity Insurance (Participating), and solicited public opinions. This is the first time participating insurance has had industry-unified model clauses. The model clauses uniformly list items related to dividend rights and interests, such as insurance amount, policy dividends, cash value, suspension and resumption of effect, and unpaid amounts, and embed dividend explanations item by item. This means that high-complaint problems such as frequent misleading sales of participating insurance and inconsistent after-sales rules are expected to be alleviated.

"Previously, customers asked, 'What is the projected interest rate of your product?' Now they ask, 'What was the product's dividend fulfillment ratio last year?'" said the wealth manager at the joint-stock bank, noting that customers are paying more and more attention to actual returns received. However, it should be noted that a high or low dividend fulfillment ratio cannot be directly equated with a high or low final rate of return.