Are insurance financial products reliable?

Good question.

Internet finance is really popular in the past few years, and various products are emerging one after another. Seeing friends around me buying and buying, I really want to ask you if you can learn from the question! Come to Zhihu to find true knowledge!

When it comes to insurance and financial products, there is really too much to say, because they are so confusing! 01 The magic of compound interest

Einstein said: "Compound interest can be called the eighth wonder of the world, and its power even exceeds the atomic bomb."

The effect of compound interest in the investment world, Close to the truth.

Principal, time, positive interest rate.

Collecting all three can summon the ultimate huge profit.

It is the belief of all rational investors.

Gamblers who want to make a profit and run away cannot understand the mentality of being friends with time.

In marching and fighting, winning rate is much more important than victory.

(1-0.01)365=0.025 (power function)

(1+0.01)365=37.78 (power function)

Work hard a little bit every day.

The truth is simple yet profound.

Unfortunately, compound interest has also become a behind-the-scenes accomplice used by many insurance companies to absorb money.

Many financial insurance companies on the market are all the same as Mr. Jia of LeTV.

They are good at suffocating your dreams and painting a pie for you.

However, they only tell you the huge number after collecting the principal, time, and positive interest rate, but they do not give you a guarantee to turn it into reality. 02 What is financial insurance?

Financial insurance is a financial product that includes death liability.

In China, it is generally based on annuity insurance, with additional participating insurance or universal insurance.

They are characterized by extremely low leverage, light on protection and emphasis on returns, but the returns are also useless, and the return of capital is very long.

Let’s take a look at Internet celebrity No. 1, annuity insurance + participating insurance.

A good-looking face, impressive data, but what kind of plain face is hidden behind it?

This table is divided into three parts:

Insurance premium (the money you pay)

Guaranteed benefits (the money you are sure to get)

Non-guaranteed benefits (money you are not sure you will get)

Let’s look at the first two parts first.

Using a timeline, you will know what this insurance wants to do.

To sum up:

If you invest 10,000 yuan, it will take 8 years to recover the capital, and it will become 1.8 times after 30 years. It will take 50 years to live to be 80 years old. It becomes 2.02 times.

If you start receiving survival benefits, you will no longer be able to surrender the policy, which means you have to live to at least 70 years old to get your money back.

Calculated based on the return of 1.8 times in 30 years, the annualized rate of return of this 10,000 yuan is about 2%.

What does this mean?

Currently, my country's CPI is around 2% all year round. CPI can be simply understood as how much your current money will depreciate every year.

This is just a theoretical value. The inflation we feel is far more than 2%.

In other words, if your money is deposited, it will not depreciate.

The more you save, the more you lose.

The bank's 5-year time deposit interest rate is above 2.75%, and the 5-year government bond interest rate is 3.4%.

If you compare the size, you should forget it.

Let’s take a look at the non-guaranteed returns of dividend calculation.

First of all, with a non-guarantee, the insurance company can be invincible and the law will protect it.

The company decides whether to pay dividends or not.

You can divide it as much as you want, and you can't divide it if you don't want to.

The low-end dividend is 0, which is honest. As for mid-to-high-end dividends, the exaggerated 4.5% and 6% are not used, but the specific amount is converted into a yield of about 1%-4%. It can be said to be a breath of fresh air among the many product promotions that like to exaggerate the rate of return.

But it is still inseparable from the packaging of compound interest. Under the assumption of the compound interest effect of interest rates and time, the calculated return is reasonable, but does not necessarily exist.

Moreover, dividends from insurance policies and dividends from company operations are not the same concept. You are only a customer of the insurance company, not its shareholder. All you can get is the profit in the participating insurance account.

This profit will become distributable profit after deducting the expenses attributable to the product, subtracting the maintenance cost, and deducting the "non-distributable profit" (the unspeakable part) that may be withheld. Which insurance company is the best? I just compiled the relevant content. I hope it will be helpful to you: the latest list! Ranking of the top ten insurance companies in the country

Finally, annual product dividends are distributed based on a 30-70 split (30% to the company and 70% to customers) for distributable profits.

Maybe you can get a lot of melon seed shells?

Let’s look at Internet celebrity No. 2, annuity insurance + universal account.

Mounting money and flowing water, I believe this is the life state that many people long for. "Pay some money every year, and you will have money for life!"

But they did not tell us that the money paid is the big part, and the money given is the small part. I will charge you a large amount of money first, and then give you some pocket money every year. The left hand is replaced by the right hand, and the insurance company is really making money lying down.

The core of annuity insurance lies in its annuity and cash value. This watch is information that the editor bought through crowdfunding for 1,001 yuan. You can’t see the cash value without insurance

The guaranteed interest rate is 3%. Please pay a 1% handling fee when transferring to a universal account. Although it is common sense to pluck the feathers of geese, this is to pull off the entire wings and roast them. Every customer is an angel with broken wings.

The survival fund is the part returned to you every year. Only this part bears interest. If you save a big pie with an insurance company, it will only pick up a sesame seed on top and calculate the interest for you every year. Calculate together. A 23-year-old male who has paid premiums for 5 years will receive 232.12 yuan per year starting from the 5th year. Assume that the universal account can earn 4% per year:

Depending on financial insurance, draw a line first. By drawing this timeline, you will have a ruler for measuring financial insurance.

Unsure of time and rate of return, no matter how good-looking the numbers are, it is just empty joy.

Summary: The money you borrowed when you were 23 years old will be repaid when you are 32 years old, and the amount will be 3.2 times when you retire.

It seems that the final return is not bad, but the fatal flaw is that liquidity will lead to a decline in profitability. Through calculation, it was found that if you withdraw before the age of 32, you will lose money; if you withdraw before the age of 40, the overall annualized return will be less than 3%.

Life is like a fleeting moment, and decades have passed in the blink of an eye.

But hanging from a tree for decades is not a pleasant feeling. 03 A summary of financial insurance

A summary of the current financial insurance:

1. Loss of liquidity

You will lose money if you surrender the policy early. If the guarantee time is not long enough, you will lose money, and the money will be locked up for the next thirty years or even longer. Over a period of time,

You may encounter NetEase, which lost a few cents when the Internet bubble burst in 2000.

You may encounter the industry washout after the 2008 financial crisis. There are "gold" cards everywhere,

You may encounter Bitcoin, which was only worth a few dollars when it was just emerging in 2013.

...

For a share Financial insurance with low returns gives up all the investment opportunities you may encounter in the next thirty years.

It's not worth it.

2. Income is lost to inflation

Financial management products do not look at absolute returns, but relative returns.

For the same income of 100,000 yuan, if you use 1 million funds, the rate of return is 10%; if you use 10 million funds, the rate of return is only 1%. If you give your own money back to yourself and sustain it until the annual return is more than 2%, you still can't beat inflation.

The attractiveness of the calculation results comes from the assumption that interest rates and time are amplified at the same time.

3. Income is not transparent

The actual dividends of the product and the dividends of the company's operations are two different things.

As a customer of participating insurance, you have no say in investment direction and income distribution.

These days, the money you “borrow” based on your ability can be paid back however you want.

Safety, liquidity and profitability are the measurements of financial products. You can never have all three, but you can at least get two of them.

This is also the dividing line between cash assets, debt assets, and equity assets.

However, current financial insurance lacks both liquidity and profitability.

We all know that when an influencer is commented on that they look safe, it is not a compliment.

04 Is there any good annuity financial insurance?

The original intention of designing annuity insurance is to prevent longevity risks. Losing money while people are still there is also a risk.

Unfortunately, although pension anxiety and education anxiety are becoming more and more obvious, the financial insurance currently on the market under the banner of pension and education funds is not considered a good annuity insurance.

Even if it is such a sincere policy with a high interest rate of 10% annualized return 20 years ago, the money it receives every year can only be regarded as a joke. Inflation is the killer of all fixed-income assets.

So, what can we conclude?

"Dead" insurance cannot fight inflation.

Fixed-income annuity insurance cannot provide you with retirement benefits.

The low-interest rate fixed-income annuity insurance allows you to lock in a large amount of money when you are young, and at the same time, it will make you homeless in the future.

A good pension annuity must follow price fluctuations in order to outperform inflation and provide us with protection in our later years. But because China's inflation is hidden, data from other countries is open and transparent. Differences in national conditions lead to differences in national consciousness.

Most of us don’t realize that financial management with capital preservation and low returns is equivalent to chronic suicide. This has also resulted in a clever adaptation of the design ideas of insurance products on the market. Inflation is a tiger, but we always treat it like a cat.

Financial knowledge tells us that stocks can outperform inflation in the long run. But we all know the situation of large A-shares. It is not easy to live in retirement in China easily. In fact, how can ordinary citizens make money so easily?

Huangliang is a dream, wake up early and be good morning. "There will be no pie in the sky, only hard work can make your dreams come true."

Interesting and passionate about insurance, useful insurance information and consultation,