This is so complicated.

Dividends come from dead spread profit (loss) + interest spread profit (loss) + fee difference profit (loss).

The insurance company adds up the three differences and losses, and if it is beneficial, the insurance company will return more than 70% of the income to the policyholder.

If it is a loss, there will be no dividends.

The calculation requires actuarial calculation, so we personally cannot calculate it.

Sources of Dividends In my country, most insurance companies adopt the popular three-element method, that is, dividends come from interest spreads, dead spreads and fee differences.

There are also companies that adopt two-difference or one-difference dividends.

The fee difference refers to the difference between the additional expense rate and the actual operating expense rate.

Generally speaking, participating insurance has a large initial investment, and there will be a loss but no gain in the fee difference.

Among the three dividend-paying insurance companies, when the participating insurance business in 2001 paid dividends in 2002, some insurance companies announced that there would be no dividend distribution.

The cost of two-difference dividend insurance is amortized according to the design fee. Even if there is a fee difference, all losses will be borne by the insurance company itself. No matter how large the initial investment cost is, it will not affect the dividend distribution. The policyholder is guaranteed to receive dividend distribution in the first year.

Death margin refers to the difference between the scheduled mortality rate and the actual mortality rate.

The margin of error is closely related to a company’s technical level of underwriting and claim settlement and its business management level.

Under normal circumstances, a stable death margin can be obtained based on the empirical life table as the basis for life insurance operations.

The interest rate spread is the difference between the actual return on investment and the predetermined interest rate.

Spreads are closely related to a company's investment capabilities.

Related to the company's surplus are the differences between reserves and surrender funds for surrendered or expired insurance policies, as well as other differences, such as profits and losses arising from changes in the way liability reserves are withdrawn, and the difference between miscellaneous income and miscellaneous expenses.

At present, most insurance companies in the Chinese insurance market adopt a fiscal year accounting method for dividend insurance business, and the insurance policy pays dividends annually.

The source of dividends includes the surplus realized in the current fiscal year, plus the dividend risk reserve withdrawn in the previous fiscal year, plus the surplus to be realized in the next year, which is the regular profit that the insurance company infers to be easier to achieve based on past experience.

surplus (this part of the surplus is pre-divided when announced in the fiscal year).

Because distributable earnings include part of pre-distributed earnings, the earnings allocated to distribution by insurance companies during the fiscal year are often greater than the actual earnings.

These three parts constitute the dividend source of the insurance company's participating insurance.

Dividend calculation The dividend calculation of participating insurance is relatively complicated. First, the company's actuary calculates the current year's surplus based on the company's capital utilization income, financial status, and business operating conditions for the year, including interest differential surplus, fee differential surplus, and dead margin.

surplus.

Then the dividend distribution plan is proposed and decided by the company's top decision-makers.

Bonus risk reserve.

Theoretically, the profit generated by an insurance policy cannot be accurately calculated until it terminates or expires.

Therefore, when distributing dividends, due to the prudent principle, if possible, a part of the surplus should be set aside in the form of dividend risk reserves to balance the dividend distribution in subsequent years and prevent ups and downs.

Bonus Calculation Basis.

The basis for calculating the dead difference bonus of participating insurance is the risk insured amount.

Participating insurance is an insurance contract. The insurance company first bears the liability for compensation, and then distributes dividends.

This is because participating insurance is an insurance contract, and the death risk needs to be shared among different policyholders, so the death cost must be shared among surviving policyholders.

How dividends are calculated.

The calculation of dividends for participating insurance is determined based on the operating conditions of the participating insurance business in the accounting year. The dividend distribution ratios of different types of insurance are different. For example, some insurance companies stipulate that the dividends distributed to policyholders for individual participating insurance shall not be less than the amount available for the current year.

Distribute 70% of surplus.

The practice of group insurance is relatively flexible, ranging from 70% to more than 70% depending on the size of the business and other circumstances.

The level of dividends is incomparable. There are many factors that determine the level of dividends, such as dividend strategy, policy liability, premium level, insurance amount, insurance company operating conditions, etc.

Dividend distribution levels are not comparable between different years.

In the early stages of the promotion of participating insurance, due to the relatively small scale of insurance premiums, high upfront costs, low reserve accumulation rate, and small amount of funds available for investment, initial dividends may be low.

This approach is not necessarily detrimental to policyholders, as it helps maintain the solvency of insurance companies and improves greater profit opportunities in the future.

With the increase of years and the accumulation of insurance policy liability reserves, the amount of dividends from participating insurance will increase year by year under normal circumstances.

The amount of dividends from participating insurance is incomparable with savings.

The interest earned on savings is fixed within a certain period, while the dividends on insurance vary with the annual surplus.

Secondly, the function of savings is only to earn interest, while insurance provides additional dividend income to policyholders on the premise of providing insurance protection.

The premium paid by the policyholder is always less than the death benefit paid by the insurance company.

Thirdly, income tax must be paid on interest income from savings, while insurance policy dividends are usually regarded as a refund of part of the paid insurance premiums, and the dividends received are exempt from income tax.