Today's content is the form and function of annuity insurance in a low interest rate environment. The development of life insurance in China began with life insurance, such as term insurance, life insurance and comprehensive insurance, and in recent years health insurance has grown rapidly, from major medical insurance to medical insurance. Annuities used to be defined as savings and wealth management products. In fact, many of its functions have not been fully explored. Its real role is to protect against longevity risks and to provide good long-term financial planning. Currently, the country is also facing a low interest rate environment and an aging social structure. Against this backdrop, annuity insurance will become the backbone of personal financial products.

Personal insurance is divided into four categories:life insurance, health insurance, accidental injury insurance, and annuity insurance. Life insurance mainly covers the risk of death, including term life insurance, whole life insurance and double life insurance. Health insurance includes medical and sickness insurance, and accidental injury is insurance that covers compensation caused by accidents. Annuity insurance is just the opposite of life insurance, covering the risk of a person's longevity. Typically, the person lives without money. Worldwide, annuity insurance is a pillar product and the originator of life insurance. It appeared before life insurance as early as the seventeenth century. The current trend shows that annuity insurance is becoming more and more important in the overall life insurance.

Annuity insurance is a kind of insurance that makes payment conditional on survival. That is to say, as long as people are still alive, they can make annual survival payments. In practice, of course, there are designs that guarantee payments for a certain amount of time, meaning that either death or survival insurance has guaranteed survival a payment for 20 years. Depending on the timing of the payments, annuities can be categorized as immediate annuities or deferred annuities. Immediate annuities are life annuities which can be paid in the first year of premium payment while deferred annuities are divided into two phases, one phase is the accumulation period of the annuity followed by the payment period of the survival fund. It has two phases but under the current regulatory requirements it should be said that there is no immediate annuity payout as the latest regulatory requirement for the first survivor fund should be payout five years after the policy comes into effect.Currently annuities are 廷期年金 which are classified into two categories:.

First, pension annuities.

As required, a pension is an annuity in which the age at which the insured survives the benefit must not be less than the state retirement age. The current state retirement age is 55 for women and 60 for men.

Second, ordinary annuities.

Ordinary enterprise annuities do not have the requirements of the age of receipt, it has many uses, in addition to the basic pension in addition to it can also do some savings for their own special matters, such as the accumulation of education gold students can choose to realize through for ordinary annuities. Annuity insurance to prevent two major risk management has three major functions, two major risks one is longevity risk, one is interest rate risk, longevity risk is actually to solve the problem as a national pension. In fact, from our study of ancient China is a very important attention to the problem of rural pension, because if we understand that ancient China is an agrarian economy and society, so in order to our old age way of life method is to raise children to prevent old age, but also to emphasize filial piety, from the level of moral construction to solve the problem of old age of the socialist society of mankind. But due to enter the modern scientific society, the structure of the impact of very big changes, now with the society brought more is the need for teachers through the network wealth arrangements to solve such problems of the pension environment, while actively cooperate with the socialization of the professional pension financial institutions to do the future of the pension service, for example, now the current sales of the pension insurance industry itself has the right to priority occupancy of the pension community, such as Taikang high-end Pension community, Evergrande Wellness Valley and so on these technically specialized pension institutions, in the market is still relatively characteristic, there are to provide migratory birds type of pension, there are also certain professional type of pension institutions, for example, the service of the disabled elderly is one of his specialties, so, through the purchase of pension insurance is also the information can be combined with the activities of the pension community as well as the pension of the service training institutions, the process is also led to our found an effective solution design program at present.

In addition, there is interest rate risk. Interest rates are uncertain in the long run. In particular, they face a future trend of low interest rates. By purchasing pension insurance, they can lock in the interest rate in advance, thus controlling the interest rate risk, which should be regarded as a very good hedging tool.

The three main functions of annuity insurance.

The first is financial planning, which allows us to accumulate wealth when we are young and enjoy it when we are old. It can effectively plan and balance the gap between income and expenditure in our life, accumulate enough pension in old age and spend it safely in young age. So pension annuities should be considered a very common retirement planning and financial tool.

The second is long-term savings. Annuities are the only tool in the entire financial sector that has a long-term savings function. An insurance company, whose funds are supposed to be relatively safe and consolidated, is also the only institution that can provide healthy returns over the long term. Others in the market, such as bank deposits are limited to a maximum of five years, and deposit periods cannot be too long. Trust terms are even shorter, and some have thresholds, such as a $3 million cap. After the introduction of the new rules on capital management, the trust industry and financial management industry has a great impact on the returns, many trust industry and financial management industry can not be guaranteed, in the market should be said that annuity insurance in this regard has a great advantage.

Thirdly, it locks in risk, it can lock in interest rate risk and longevity risk, and it can also be used for special purposes, and in fact, it is also controlling the risk of cash flow. The risk of cash flow can be controlled by purchasing annuity insurance through mandatory savings to prevent premature use of pensions, thus affecting future retirement needs.

Common types on the market in accordance with their own design period to see we can develop into a fixed-rate type of annuity, income is relatively clear, at present, China is also more of such a type of, the other is a participating product, the participating type provides a minimum living guarantee of a Chinese interest rate, above is based on the production and operation of the Social Insurance Co., Ltd. is mainly the case of the surplus of the dividend account by the insurance company and customer relations for students this important part of the proceeds to do a share.

The third is universal insurance, which is somewhat similar to dividend insurance, but also offers a guaranteed minimum interest rate, based on the actual investment situation of the client.

The fourth is the investment-linked annuity, insurance companies do not bear the risk of social investment management, including the safety of the principal of the product is not guaranteed, the investment project risk is borne entirely by the policyholder.

The fifth is variable annuity, which is actually investment-linked insurance combined with minimum guarantee. Investment-linked and variable annuities are relatively rare in China, mainly because the volatility of our stock market is very high and investment-linked and variable annuities are needed to stabilize the capital market. With the volatility of investment returns and the trend toward low interest rates, it should be said that in order to control the risk of carry losses, it should be said that in the future, insurance companies will convert to dividend and universal annuities, beginning with the current more fixed rate annuities. There will be fewer and fewer fixed rate annuities available, especially those with high returns and fixed rates. It should be noted that they are a scarce resource and there is currently some historical opportunity for them. Such products are likely to become scarcer in the future, so fixed rate annuities are scarce.

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