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Trump signed a new round of stimulus plan into effect on January 2021, 1, and the widely-watched $1 bailout has finally settled, and one after another is settled (What should I do if I did not receive the bailout money?).
However, the 5-page bill, in addition to providing assistance to families and businesses, as well as providing financial support for vaccine distribution and other initiatives,Also joined the "rescue" for the life insurance industry.
Today we invited a life insurance columnist who tracks the life insurance market and regulations and policiesBen, To conduct detailed Q&A and interpretation on this.
Through beautyChina Life Insurance GuideWe hope that we can help policyholders or investors understand the current situation of the industry in the current special historical time period and make their own insurance and product selection judgments.The following is the content of the question and answer.
Q: What has changed in the new round of stimulus bills?
A:To put it simply, in the policy account, you can only deposit $1 per year. After the rescue bill is implemented, you can now deposit $1.5 or $2 per year. How much you can save depends on the life insurance company's announcement or according to the product type. release new product.
Q: I don't understand the statement that "the bill allows policyholders to save more money". Don't I want to buy insurance as cheap as possible?Why should "be allowed" to spend more money?
A:Cash value life insurance is a financial asset,It is not a consumer product, and there are tax incentives.This is not comparable to consumer product insurance such as car insurance, home insurance, and health insurance.
Just because the name contains the word "insurance", policyholders usually understand it according to the habitual thinking of buying consumer insurance.Changing this kind of thinking is just a process of market education and it takes time.
In the previous American Life Insurance Guide community, there was an articleDedicated article,speakThe historical origin of life insurance’s ability to hide money, and the long-term struggle with the US government.
It’s now allowed to save more money. From my personal point of view, this change actually implies "The low interest rate environment for a long time to come", also for life insurance companies"Keep up with the timesThe green light of the policy allows more social funds to be absorbed into the fund pool of life insurance companies.
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Q: Which insurance companies do you think the new bill will have the greatest impact on?
A: This is a good question.Before answering, I want to talk about the basic operation of insurance companies. A simple analogy is that insurance companies collect premiums from current policyholders.Investment and financial management, And then pay the past policyholders, as well as the company’s operating costs.
It means that insurance companies continue to expand their "fund pool" by selling products and absorbing premiums.
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From the 70s to the 80s, in order to expand the capital pool, the types of life insurance sold were mainlywhole life和Traditional Universal Life.This type of insurance policy must give a guaranteed rate of return, which is usually associated with the yield of national debt.
Under the fierce market competition at that time, in order to allow the public funds to continue to flow into the pool, this type of life insurance company gaveVery high guaranteed rate of return.
Over the past few decades, interest rates have continued to fall, and the investment income of the fund pool has also continued to decline, and insurance companies must pay out according to the guaranteed rate of return agreed in the contract at the time.
In addition, the policyholders in the 70s and 80s began to settle claims or withdraw funds more than 30 years later.
Finally, the outbreak of 2020U.S. Coronavirus Outbreak, Brought historical interest rates to new lows, in this respectFurther reduce the income stream of investment and financial management of insurance companies, On the other hand, due to the guaranteed rate of return of the savings dividend insurance (Whole Life), the internal guaranteed actuarial rate of the traditional Universal Life is alsoKeep decreasing, Causing investors to feel unprofitable, the willingness to buy insurance has dropped sharply, and the speed of new insurance premiums flowing into the fund pool is also facing the risk of slowing down.
There is less money coming in, but more money going out. If this continues for a long time, the pool is in danger of drying up.
The result is that the more established brands are dedicated, the more they have sold in the past and the larger the market share.Life insurance company, Especially the "Mutual" typeSavings and Dividend Life Insurance Company, The more I dug a "big hole" for myself.
Q: What about index or securities life insurance?
A: The lips are dead and the teeth are cold. This is a problem faced by the entire society and the industry as a whole.Insurance product typeIt doesn't matter.In general, financial insurance products with less guarantees or no guarantees should be the main trend in future development.
Q: The last question, if you want to apply for insurance now, what would you do?
A:If I want to buy insurance in 2021, under the current interest rate environment, I will first think clearly, what is the goal of my investment, which is to conduct asset risk management?Is it to make your own retirement income?Or simply use leverage to leverage life-long protection, or leave an inheritance to future generations?
According to my own family situation and life stage, after thinking clearly about the goal, based on the principle of maximizing personal interests, I will select products and design management plans.
The selection of financial insurance policy products on the market is very rich, and I am also looking forward to the issuance of life insurance policy products under the new regulations by some insurance companies that have been "unbearable" in 2021.
Finally, this dialogue is not about investment and insurance recommendations, but only personal views and opinions on the life insurance part of the second round of the stimulus bill.If you have different opinions, you can write to me to discuss. (Finish)
*This article only represents the author's own views, not the position of American Life Insurance Guide.
