What is the difference between participating insurance and traditional life insurance?

(1) Participating insurance refers to the policyholder’s right to the distributable surplus of the insurance company’s participating insurance business.

(2) Traditional life insurance (term life insurance): refers to life insurance that only has protection and savings functions.

Detailed explanation:

Participating insurance originates from the fact that the risk of changes in the fixed interest rate of the policy and the market rate of return for a long time to come is shared between the policy holder and the insurance company. It refers to a type of life insurance in which an insurance company, after the end of each fiscal year, distributes the distributable surplus of this type of participating insurance in the previous fiscal year to customers in the form of cash dividends or value-added dividends according to a certain proportion. Participating insurance is an effective means for life insurance companies around the world to avoid interest rate risks and ensure their stable operations. Compared with traditional protection-type life insurance policies, participating policies provide non-guaranteed insurance benefits to policyholders. The distribution of dividends will also affect the liability level, investment strategy and solvency of the insurance company.

Life insurance is the most important type of insurance. It takes human life as the insurance subject and life and death as the insurance accident. It is also called life insurance. Life insurance is a type of personal insurance. As with all insurance business, the insured transfers the risk to the insurer, accepts the insurer's terms and pays the premium. But unlike other insurance, life insurance transfers the risk of survival or death of the insured.