As far as the channels for providing liquidation and financing are concerned, policy pledged loans are different from commercial loans, which are mainly reflected in the following aspects: First, the policy holder has no legal obligation to repay the policy pledged loans, so the relationship between the policy holder and the insurance company is not a general lending relationship; At the same time, the insurer only needs to approve the loan according to the cash value of the policy, and there is no need to review the credit of the applicant who applies for the loan; For commercial loans, banks have strict examination. Therefore, for insurance companies, the policy pledge loan business can be regarded as an additional service with low management cost. At present, China's personal financial consumption market is growing at an ultra-high speed, and personal financial institutions and companies are innovating to seek greater market share and income. At the same time, with the enhancement of financial awareness, people put forward higher requirements for insurance and its derivative services. Developing insurance loan business can enable insurance companies to provide more competitive financial services, expand market share and enhance capital strength and competitiveness.
The important content of contract preservation is to reduce the surrender rate.
In practice, surrender is an important legal right of the insured and an important means to realize the insurance policy. However, the display cost of the new policy is very high. If a large number of insurance policies fail in previous years, it is difficult to amortize the initial investment cost of insurance companies, resulting in great surplus pressure. If it expires in the next policy year. Although the insurance company may have recovered the initial investment cost, it may not be able to achieve the predetermined profit target when pricing products, thus affecting the company's profitability and capital accumulation speed. For potential policy holders, due to the weak liquidity of the policy, when there is a shortage of funds or other better investment opportunities, they will use surrender to raise funds and give up using insurance for protection and investment. Therefore, life insurance companies have specially developed a series of services, namely contract preservation, to maintain the continuity and effectiveness of effective life insurance contracts. Among them, policy loan is one of the important means to achieve this goal. By enhancing the liquidity of long-term life insurance policies, the motivation of the insured to "surrender and realize" is greatly reduced, so as to cultivate a stable customer base through this additional service.
2 Three characteristics of policy pledge loan
The policy itself must have cash value. Personal insurance contracts are divided into two categories: one is medical expense insurance and accidental injury insurance contracts, which belong to loss compensation contracts and cannot be used as collateral like property insurance contracts; The other is life insurance contracts such as endowment insurance, investment dividend insurance and annuity insurance with savings function. As long as the insured pays the premium for more than one year, the life insurance policy has a certain cash value, and the insured can ask the insurance company to return part of the cash value at any time to realize the creditor's right. Such a policy can be used as collateral.
There are restrictions on the term and loan amount. At present, China's policy pledge loan has a short term, generally not exceeding 6 months, and the maximum loan balance does not exceed a certain proportion of the cash value of the policy. This ratio is different from that of insurance companies, generally between 70% and 80%; Banks are more relaxed, generally reaching 90%. The loan must be returned in time after it expires. Once the loan principal and interest exceed the cash value of the policy, the policy will be permanently invalid.
Policy loans need interest. In China, the current policy loan interest rate is relatively fixed. The interest rate is calculated according to the predetermined interest rate stipulated by the CIRC and the higher bank loan interest rate plus 20% in the same period, and the result is higher than the interest rate for calculating the cash value of the policy [1].
3. Analysis of the advantages and disadvantages of policy pledge loan as an investment channel
Insurance companies have significant advantages in using policy loan business investment channels.
At present, in the use of insurance funds permitted by China's current laws and regulations, the policy pledge loan business is the only loan issuance business allowed by insurance companies, which has strong security, liquidity and high profitability.
Mainly in the following aspects:
(1) The risk of default is small. Because the policy pledge loan business takes the cash value of the policy as collateral, the loan amount does not exceed the cash value of the policy. The unpaid loan balance due to the applicant's surrender or the death of the insured must be deducted from the surrender premium or payment, or when the cash value is insufficient to pay the unpaid premium and interest, loan and interest, the effectiveness of the insurance contract will automatically terminate. Therefore, in theory, the risk of policy loans is very small and almost negligible;
(2) The income is relatively high. Compared with other investments of insurance companies, according to the current regulations of the regulatory authorities, the loan interest rate of the policy loan business is higher than the bank time deposit interest rate and the yield of government bonds in the same period;
(3) The cash flow is relatively stable. For insurance companies, a lot of risks come from the uncertainty of the amount and time of future cash flows of assets and liabilities. The term, amount and repayment method are clearly stipulated in the policy pledge loan business, which is predictable and conducive to the investment planning and asset-liability project management of insurance companies.
There are interest rate risk and opportunity cost, the more the better.
Policy pledge loan may affect the investment plan and cash flow of insurance companies, especially in the case of interest rate fluctuation, lenders can get more benefits by increasing loans or repaying loans as soon as possible, but insurance companies can only be forced to accept it, that is, the policy pledge loan right is essentially an option provided by insurance companies to policyholders or policyholders. Therefore, the determination of interest rate level is a core problem that insurance companies face when formulating the terms of policy pledge loans. Usually, the interest rate of the loan pledged by the policy is higher than the interest rate for calculating the cash value. When the loan interest rate is fixed, the fluctuation of market interest rate stimulates the loan motivation of policy holders to a certain extent, which correspondingly causes the adverse effect of policy loans locking in the investment funds of insurance companies, which means that the funds that insurance companies can use for other investment channels are reduced, or even high-yield and high-quality investment projects are abandoned, and the stability and profitability of corresponding operations are affected. In addition, handling policy loans also requires certain administrative expenses, which increases operating costs. [2]