On a recent visit to Beijing, China's Sunshine Insurance Group showed me just how innovative they are in developing new products. Chinese life insurance industry may not yet be online, but in terms of product offerings, they claim to be the most innovative yet when it comes to insuring risk. To prove his point he described their recently introduced a new marriage insurance called "love you forever " aimed at protecting the rights of wives in divorce.
According to the company, the insurer must be the husband and the wife will receive 60, 80 or 100% of the interest in the policy on divorce or on reaching its expiry term, whichever should come first. Fifty years after being insured, the wife will receive a payoff from the company to celebrate the golden wedding.
Using NZ currency equivalents, if the husband buys a $100,000 policy, on the 50th anniversary, his wife will get $800,000 from the account if she had a 100% interest in the policy. In the event of a divorce, the pay-out is substantially reduced. The incentive to maximise the pay-out is to stay married for the full term of the policy.
Sunshine Insurance Group said that women are still a vulnerable group in society as well as in marriage, so this was a way of protecting women's rights. Some believe the idea is meant to reduce the chance of a husband having an extramarital affair.
However, other Insurance companies have expressed concerns about marriage insurance, pointing out that some couples might choose to divorce in order to qualify for a pay-out, and then re-marry, as there was nothing in the insurance contract preventing such abuse. Others criticise the stipulation that the wife benefits because sometimes wives are equally responsible for divorces.
Marriage insurance… innovation or just another attempt by Insurance Companies to incentivise its policy holders to retain their investment linked insurance policies?