Monday, July 24, 2017

China cracks down on universal life policies

Universal life insurance cannot be anymore sold as an add-on to regular life policies in China, the country’s insurance regulator announced recently.

The move is expected to hurt many Chinese insurers that have mainly relied on the practice to get funds for their domestic and overseas investments over the past few years.

It is among the concrete actions undertaken by the China Insurance Regulatory Commission (CIRC) to rein in systemic risks in the nation’s insurance industry following the dismissal of former CIRC chairman Xiang Junbo in April for alleged violations on code of conduct.

The watchdog already issued a circular laying down the development and design of life insurance policies.

The circular specifically bans the sale of universal life insurance as riders to normal life products.

Universal life products are wealth management products that yield high in such a short period with flexible surrender provisions.

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