The dividends of participating insurance come from the life insurance company's "three differences", namely the death difference, the interest difference and the fee difference. The main dividend distribution methods include the cash dividend method and the incremental dividend method. The two earnings distribution methods represent different distribution policies and dividend concepts. They reflect different transparency and connotative fairness. They have different requirements on policy asset shares and liability reserves. The impact on the dividend distribution method and the cash flow of life insurance companies are also different. Therefore, in order to protect the interests of policyholders, life insurance companies should adopt a very prudent attitude towards the formulation and changes of dividend distribution methods, and should pay attention to the reasonable expectations of policyholders. , implement the principles of honest operation and fairness in dividend distribution, and fully consider the impact of dividend distribution on the company's future dividend level, investment strategy and solvency. 1. The cash dividend method adopts the cash dividend method. After the end of each fiscal year, the life insurance company first determines the distributable surplus for the current year based on the business surplus of the current year, and the company’s board of directors considers the opinions of the designated actuary. Their contribution to total surplus determines policy dividends. Dividend allocations between policies vary by product, entry age, gender and policy age, reflecting the policyholder's contribution rate to the participating account. Under normal circumstances, life insurance companies will not treat all the surplus generated by dividend accounts each year as distributable surplus. Instead, they will distribute it based on operating conditions and on the condition that future dividends are basically stable. Undistributed earnings are retained by the company to smooth future dividends, pay final dividends, or as stockholders' equity. The contribution principle of surplus distribution under the cash dividend method reflects the fairness principle of dividend distribution among different policyholders. Under the cash dividend method, policyholders can generally choose to retain the dividends in the company to accumulate interest, withdraw dividends in cash, and deduct the next period's premium, etc. to allocate cash dividends. For policyholders, the choice of cash dividends is relatively Flexible to meet customers' various needs for bonuses. For insurance companies, cash dividends increase the company's cash flow expenditures while reducing liabilities, easing the pressure on life insurance companies' solvency. However, the distribution policy of the cash dividend method is relatively transparent. Under market pressure, the company has to distribute most of its surplus to maintain a high dividend rate to attract policyholders. This part of the assets cannot be used effectively, which makes life insurance The company's investable assets decreased. In addition, the annual dividends paid will put greater pressure on the cash flow of life insurance companies. In order to ensure the liquidity of assets, life insurance companies will correspondingly reduce the proportion of investment in long-term assets, which affects the total investment income to a certain extent. Policy holdings People also end up with lower dividends. The cash dividend method is a dividend distribution method commonly used by life insurance companies in North America. 2. Incremental dividend method The incremental dividend method allocates dividends in the form of increasing the existing insured amount of the policy. The policyholder can only truly receive the allocated dividends when an insurance accident occurs, expires or the policy is surrendered. The incremental bonus consists of three parts: regular incremental bonus, special incremental bonus and terminal bonus. Regularly increased dividends use the simple interest method, compound interest method or double interest method to increase the dividends to the insurance amount at a certain proportion every year; special increased dividends only increase the dividends in a one-time amount under some special circumstances, such as changes in government tax policies. The amount; the terminal dividend is generally a certain proportion of the distributed dividends or the total insurance amount. Part of the surplus generated during the policy period is deferred to the end of the policy period for distribution, which reduces the uncertainty of the source of dividends during the policy period and improves the annual dividend level. Towards stability. The incremental dividend method gives life insurance companies sufficient flexibility to smooth dividend distribution, maintain a stable annual dividend level, and make final adjustments with final dividends. Since there is no cash dividend outflow and the deferral of dividend distribution increases the investable assets of life insurance companies, and there is no pressure on dividend cash outflow, life insurance companies can increase the investment proportion of long-term assets, which greatly increases the share of dividend funds. Investment income increases dividend income for policyholders. However, under the incremental dividend method, the policyholder's only option for handling dividends is to increase the insurance balance of the policy, and the dividend income can only be obtained when the policy expires or is terminated. Policyholders have less flexibility in choosing dividends. Loss of control over dividends. In addition, under the incremental dividend distribution policy, the dividend distribution is basically determined by the life insurance company. It is difficult to explain to policyholders the rationality of the current distribution policy and its impact on the interests of policyholders, especially when life insurance companies use terminal dividends to increase dividends. After smoothing, basic transparency is lacking. The incremental dividend method is a dividend distribution method adopted by British life insurance companies. This distribution method must be operated in a relatively mature environment of the insurance market.