Online term life insurance grows explosively due to protection element

The explosive growth of online term life insurance policies, favored by the younger generation, is due to the regulator relaxing regulations over the sector, according to industry insiders.

In July 2015, the China Insurance Regulatory Commission eased the rules governing the booming Internet insurance business to allow insurers to expand their business into personal accident injury insurance, term life insurance and ordinary whole life insurance in areas where they have not formed branch offices.    

Life insurance is primarily used to pay off any personal debts and support the policy-holder’s dependents in the event of his or her death. Unlike whole life insurance which may cost the insured more in premiums, term life insurance plans provide risk protection at minimal cost and are favored by the younger bread-winners.

As much as three fifths of buyers for the term life insurance are between 30 and 39 years old, and 60 percent of them are males, according to data. Most of the buyers are house owners servicing a mortgage, business owners and middle class consumers who have a strong demand for the protection such policies offer, industry insiders said. 

By teaming up with Tencent’s financial technology business arm and Shanghai Renascence Insurtech Company Ltd, Pramerica Fosun Life Insurance Company launched a term life product last December which became popular due to its strong protection element and lower premiums.

The move marks a first-time attempt from insurance firms to apply big data from a third party for risk control while designing and promoting long-term life insurance plans, business insiders noted.

Data from the China Insurance Association indicates that China’s Internet life insurance recorded a premium income of 138.3 billion yuan (US$20.14 billion) in 2017, but it was small figure in the whole industry and therefore has huge growth potential.