Insurance companies adopt the method of increasing dividend distribution.

According to the regulations of the CIRC, cash dividends should be calculated according to the contribution method, that is, the method of distributing the surplus among the policies according to the contribution of each policy to the generated surplus, which is expressed according to the three profit sources of spread, dead difference and fee difference, which is commonly called the three-difference dividend method. These include:

Interest spread: the surplus generated by investment income;

Death difference: remaining due to death;

Expense balance: surplus generated by expenses incurred.

The CIRC stipulates that the insurance company shall distribute no less than 70% of the distributable surplus to the insured in each fiscal year.

After the company determines the surplus actually distributed to the insured, it shall distribute it among the policies according to the principles of fairness and sustainability.

According to the regulations of the CIRC, there are two ways to pay dividends: cash dividends and incremental dividends.

Cash dividend: refers to the direct distribution of surplus to policyholders in cash. Collection methods include: cash, premium payment, accumulated interest and purchase of paid insurance amount.

Increased bonus: refers to the distribution of bonus by increasing the insured amount every year during the whole insurance period. Once the increased insurance amount is declared as a bonus, it cannot be cancelled. An insurance company that adopts the method of increasing dividends may pay the final dividend in cash when the contract is terminated.

At present, most insurance companies in the world adopt cash dividend methods, including Ping An; Xinhua and some domestic joint venture insurance companies adopt the way of increasing dividends.

Further reading: How to buy insurance, which is good, and teach you how to avoid these "pits" of insurance.