Buy pure protection insurance first, and treat "return" and "dividend" features as parts that aren't guaranteed

Cost

With pure protection insurance, no money comes back at the end of the term, and you may feel "that money was wasted." Saving is something you have to arrange yourself. The hard part is accepting that this money won't come back.

What you get

Regulatory rules require that the description of a participating (dividend-type) product state in bold type: "future policy dividends are non-guaranteed benefits, and the allocation of dividends is uncertain." The dividend illustration is the projection table the insurer shows you, and its spread has an upper limit of 4.5% minus the product's guaranteed rate. The guaranteed rate is the rate of return fixed in the contract. The extra premium paid for return-type and dividend-type products is like savings handed to the insurer to manage. Its return is not guaranteed, and its liquidity is poor, so it is not easy to take out (China, in effect since 2023)

Notes

Disputed: for people who can't save money at all, return-type insurance forces you to pay on schedule, and that role has real value. The advice above is aimed at ordinary people who can discipline themselves. How much better "buy pure protection and invest the premium you save yourself" is than "buy return-type" depends on the specific product, and this section has no systematic data to cite. This is not investment advice.

Evidence grade

C : The author's experience or common practice, without direct literature.

Sources

1. 中国银保监会 (2022). 一年期以上人身保险产品信息披露规则（银保监规〔2022〕24 号）. https://www.gov.cn/zhengce/zhengceku/2023-01/04/content_5735014.htm

Translated from the Chinese original. Original book, section 5, tip 25. This section is about money and spending. It is general information, not financial or investment advice. Content may be out of date and rules differ by place. When you actually deal with an agency, a doctor or a court, follow what local officials, doctors and lawyers tell you. Disclaimer