Core Viewpoint - The new regulations on universal life insurance (ULI) aim to enhance supervision and address deep-rooted issues in the market, including the prohibition of products with terms shorter than five years and the dynamic adjustment of minimum guaranteed interest rates [2][3][4]. Summary by Relevant Sections Regulation Overview - The National Financial Supervision Administration issued a notification that will take effect on May 1, 2025, allowing for dynamic adjustments to the minimum guaranteed interest rates of ULI and prohibiting products with terms shorter than five years [2][3]. - Insurance companies must complete rectifications for existing ULI products that do not comply with the new regulations by April 30, 2026 [2]. Product Development and Management - The notification emphasizes the need to regulate ULI product development, enhance protection levels, and strengthen account management and fund utilization supervision [3]. - It prohibits the design of ULI products, except for whole life insurance, endowment insurance, and annuity insurance, and encourages companies to adjust surrender fees and policy bonuses to extend the actual duration of policies [3]. Sales Management - Insurance companies are required to improve the classification and suitability management of sales personnel to prevent misleading sales practices [3]. - A negative list for sales behavior is mandated, prohibiting the use of terms like "interest" and "expected returns" in marketing, and ensuring that the insurance protection attributes are not downplayed [3]. Fund Utilization and Risk Management - The notification allows for the adjustment of minimum guaranteed interest rates under certain conditions, reflecting a more flexible regulatory approach to market interest rate fluctuations [4][9]. - Strict regulations on fund utilization are introduced, including limits on concentration and non-standard investments, and prohibitions on complex transactions that could harm policyholders' interests [4][5]. Market Trends and Historical Context - ULI products were once highly favored due to their high guaranteed returns, with some products offering rates as high as 8% between 2014 and 2017, significantly outperforming traditional bank products [6][7]. - However, issues such as inadequate protection functions and aggressive fund management practices have led to increased regulatory scrutiny and a decline in ULI's popularity since 2017 [7][8]. Future Outlook - The implementation of the new regulations is expected to lead to a significant transformation in the ULI market, with a potential shift towards long-term protection products that cater to needs such as retirement and education funding [9][10]. - Industry insiders predict that companies may lower settlement rates further or develop hybrid products that combine protection with light investment features [10].