Ensuring a long marriage with insurance

Gao Liping (center), a marriage registration official in Shanghai, conducting a wedding service, at the Shanghai Yangpu District Marriage Registration Center. Because of a slowdown in income growth from premiums, many insurance companies are trying so-called marriage protection policies. However, the market response to the "concubine-proof" insurance product, as it is being called by many on the Internet, has not been a stampede. [Photo/China Daily]

'Concubine-proof' policies developed as industry looks to new sources of income

As insurers in China began to see slowing premium income growth during the past quarter, some of them started to introduce new products to appeal to people with various needs - especially the recently wed seeking security in their new status.

With the number of failed marriages increasing and the spotlight on the recent divorces of Chinese celebrities, insurers have sensed new business opportunities to meet the desire of rich people for a sense of security in wedlock.

Various kinds of insurance policies have been introduced that generate the maximum payoff only if a couple stay together.

"We hear almost every day about the news of some person's failed marriage. Buying a marriage policy will help ensure your marriage lasts and, at the worst, it will secure some compensation in the event it fails," said Zheng Donghai, an insurance consultant to potential client Xu Jing.

Zheng is recommending an insurance policy to Xu, a 29-year-old newly-wed who just quit her job to become a full-time housewife.

Zheng explained that a wife can take up to 100 percent of the insurance payout if the marriage fails. As a dividend insurance policy, the longer the marriage lasts, the more interest will accrue.

An example on a booklet about marriage protection insurance says if a husband pays 500,000 yuan ($80,000) to buy a 50-year-term policy, the yield will be 4 million yuan if the marriage is still alive when the term ends.

"I have not met a single male client inquiring about this insurance. I think in a society that has been witnessing a rocketing divorce rate, women, who are usually considered the most vulnerable in a marriage, tend to seek protection through financial measures," said Zheng.

In 2011, some 2.9 million couples, or 5.8 million people, divorced in China, according to the Ministry of Civil Affairs. In Shanghai, the divorce rate was 39 percent last year.

Currently, several insurers, including Ping An Insurance (Group) Co, Taikang Life Insurance Co, Sino Life Insurance Co, Sunshine Insurance Group Co and Anbang Insurance have introduced similar policies, according to Xinhua News Agency.

Market response to the so-called marriage protection insurance policies, however, has not been a stampede.

"I have heard of such insurance, and I know they have a nickname called 'concubine-proof insurance'. I will never buy it because buying it means you have no faith in the marriage," said Zou Lintao, a Shanghai resident who just got engaged.

Chai Zhijun, 42, a restaurant manager who has been married for 14 years, said he would not buy such insurance for his wife because: "It just sounds stupid to compensate a woman with money for cheating on her and it may be quite unfair for the husband if it is the man that has been cheated."

Yan Fang, an insurance saleswoman in Hangzhou, Zhejiang province, said life insurance has experienced a hard time during the past few months. Developing new products may help to boost sales.

Domestic life insurers realized 758.6 billion yuan in income from premiums in the first three quarter of 2012 with a market share of 96 percent. Technically speaking, there is no insurance in China that hedges the risk of divorce, according to Justin Chang, an actuary with AIA in Hong Kong.

A policy that hedges divorce risk guarantees compensation when the beneficiary is divorced. To develop such a product, a model based on masses of data is needed. It usually take years to gather and analyze the data, said Chang.

Also, a policy that hedges divorce risks is too risky for insurers because moral hazard cannot be ruled out in that many people may have a false divorce in order to get the compensation, according to Chang.

Wealth managers said they advise looking at the nature of an insurance policy and understand how it works.

The first thing to consider must be whether an insurance policy is suitable for the buyer, said Shen Tong, a wealth manager with the Industrial Bank Co.

"Many developers of insurance policies may give the product an attractive name and highlight a pragmatic function to attract buyers. If buyers do not read the terms and conditions carefully, they will expect the returns that are illustrated in the name itself alone - but they may not be written into the terms," said Shen.

A buyer needs to find out how long the term is, whether the dividend is guaranteed and what the yield rates are.

Some "marriage protection" insurance policies are in fact life insurance policies that designate the beneficiary as the spouse of the policyholder, she added.

"At a glance it may encourage an enduring and lasting marriage but, if you read the details, then you will realize that the insurance interest depends not on whether a couple is divorced but on their health and other factors," she said.

wuyiyao@chinadaily.com.cn