Deposit-to-Insurance Scams Persist Despite a Decade of Crackdowns—Who's Still Targeting Seniors' Savings?

Ask AI · Why is it so difficult to ban deposit-to-insurance conversions over ten years, and how does the利益链 operate?

Southern Finance All Media Reporter Lin Hanyao, Intern Xu Ruoxuan

In recent years, the sales misguidance phenomenon of “deposit to insurance” has been repeatedly prohibited, especially in rural areas and among the elderly.

Despite continuous regulatory efforts and the introduction of new regulations such as the “Financial Institution Product Suitability Management Measures” in 2026, some elderly depositors are still misled at bank branches into investing their “retirement money” into insurance products that require holding for years or even lifelong.

Our review of cases across multiple regions shows that the sales misguidance methods for “deposit to insurance” are highly similar—obscuring product attributes, avoiding liquidity risks, and using gifts like rice and oil to gain trust, ultimately inducing depositors to sign long-term life insurance policies of up to five years.

Industry experts point out that strengthening the primary responsibility of financial institutions and reshaping compliance assessment mechanisms are urgent. For consumers, under strict regulatory conditions, enhancing risk awareness and effectively using legal tools to protect rights remain key defenses for safeguarding their “money bags.”

Misleading Scripts Turn Deposits into Policies

Recently, media reports revealed that an 68-year-old in Tianmen, Hubei, went to a bank to deposit 10,000 yuan. Under the recommendation that “interest is higher than deposits” and “can be withdrawn after five years,” he inadvertently signed a lifelong life insurance policy, paying 10,000 yuan annually for five years. It was only two years later that family members discovered that the so-called “deposit” was actually an insurance product that pays out only upon the insured’s death or total disability.

This is not an isolated case. On the Black Cat Complaint Platform, multiple consumers have complained about “banks misleading the elderly into converting deposits into insurance,” and when attempting to cancel, they were told “only the cash value can be refunded.”

Our review of complaints from various regions shows that the core deceptive sales tactics are highly similar: describing complex products like whole life insurance or care insurance as “five-year fixed deposits,” promising “higher-than-deposit returns,” avoiding the word “insurance,” and even using gifts like rice and oil as bait. Taking advantage of the elderly’s natural trust in banks, these tactics induce them to sign long-term policies without fully understanding the product attributes or reading the contract terms. By the time depositors realize the truth, the withdrawal window has often closed, and they face significant principal losses, with banks and insurance companies shifting blame and making rights protection difficult.

This deception masks the inherent costs and liquidity restrictions of insurance products.

The value of an insurance policy typically takes a long time to exceed the premiums paid. If consumers withdraw within the early years, they usually only receive the “cash value,” which is often far below the premiums paid.

In the case from Hubei, even after paying for five years, the cash value table shows only 50,950 yuan (5,000 principal plus 950 interest). Similar cases in Zhejiang and other regions show that when depositors discover the “deposit” is actually insurance and attempt to cancel, they are told they can only recover a small amount—losses exceeding 50%.

During sales, the liquidity risk of “money put in but hard to withdraw” is often downplayed, leading some less risk-tolerant investors to face substantial losses when urgent funds are needed.

In fact, “deposit to insurance” is not a new problem.

As early as 2017, CCTV’s 315 Evening Gala publicly named some bank branches for misleading customers into buying insurance. Over the past decade, regulators have increased penalties, but such violations persist.

According to administrative penalty disclosures from the National Financial Regulatory Administration, the insurance industry continued its “strict supervision” stance in 2025, with multiple fines in the millions involving violations in banking and insurance business.

Public information shows that in April 2025 alone, Tianjin regulators issued five fines to a bank branch and responsible persons for “misleading policyholders” and “promising benefits beyond the insurance contract.” Regulatory authorities in Beijing, Shandong, Henan, Hubei, and other regions have also penalized similar violations, with total fines exceeding ten million yuan.

Profit Motivation and Information Asymmetry Lead to Persistent Violations

Tsinghua University Law PhD and senior legal advisor Yang Xiang told 21st Century Business Herald that the root cause of these issues lies in distorted incentive mechanisms driven by commercial interests and information asymmetry in financial transactions.

Traditional banking business models rely on “interest margin” for profit. KPMG’s “2026 China Banking Outlook” reports that banks face multiple challenges such as narrowing net interest margins, asset quality pressures, and stricter regulations, making intermediary business the core growth engine. For frontline bank staff, selling a long-term life insurance policy yields much higher commissions than handling hundreds of small deposits. Under performance targets, sales staff may prioritize sales over compliance or even evade regulations.

Meanwhile, insurance companies, competing for the scarce traffic of bank branches, often pay high channel fees to banks, resulting in high channel cost ratios. Media reports indicate that some insurance subsidiaries bribed financial institutions with cash and goods worth over 220,000 yuan through false expense reimbursements, and were convicted of bribery.

Furthermore, information asymmetry provides fertile ground for sales misguidance. Financial products are highly complex, and Yang Xiang pointed out that ordinary consumers lack the professional judgment to accurately distinguish between deposits, wealth management, funds, trusts, and insurance, which have different legal attributes.

The “2025 Consumer Financial Literacy Survey” by the National Financial Regulatory Administration shows that the national financial literacy index is 67.61, with an average score of only 54.28 in financial behavior. Consumers have significant shortcomings in actual financial decision-making. Those over 60 have the lowest scores (62.16), yet trust financial institutions’ outlets at as high as 84.56%. This “high trust, low literacy” mismatch makes them vulnerable to offline misguidance.

More concerning is that some regulatory tools have been deformed into “formal compliance” in practice.

Yang Xiang emphasized that during suitability assessments, some salespeople evaluate on behalf of clients or give improper prompts, inducing clients to fill out false financial or risk preference information to pass system checks. During “dual recording” (audio and video), lengthy legal terms are often rushed through at high speed, failing to truly protect consumers’ right to know. This regression from “substantive compliance” to “formal compliance” weakens the protective effect of the system design.

“Particularly problematic are third-party agencies involved in sales,” Yang Xiang stressed. “Financial institutions must strengthen their dual responsibilities in agency sales, clearly defining the suitability management obligations of both the entrusting and entrusted agencies in contracts, and bearing corresponding legal responsibilities.”

The “Product Suitability Management Measures” Reinforce Main Responsibilities

On October 1, 2025, the “Management Measures for Commercial Bank Agency Sales” officially came into effect. On February 1, 2026, the “Financial Institution Product Suitability Management Measures” were also implemented. These regulations are highly anticipated by the industry.

The “Management Measures for Commercial Bank Agency Sales” require banks to strengthen the qualification and conduct management of sales staff, strictly screen partner institutions, improve internal controls and sales traceability, and prohibit 11 types of misconduct, including false advertising, forced bundling, client operation, and guaranteed returns. Recording and archiving the entire sales process is mandated. Responsibilities among parties in agency sales are clarified, and the agency agreements between banks and partners must specify rights and obligations, addressing the question of “who to turn to if problems arise.”

The “Product Suitability Management Measures” provide special protections for clients over 65 years old: banks selling high-risk products to seniors must fulfill special duties, including developing specific sales procedures, gathering additional information, enhancing disclosures and risk warnings, providing more time for decision-making, and conducting timely follow-ups.

Yang Xiang highly praised these new regulations: “From the 2025 ‘Management Measures for Commercial Bank Agency Sales’ to the 2026 ‘Product Suitability Management Measures,’ the regulatory approach has shifted from purely ‘post-event penalties’ to ‘prevention, in-process control, and post-event accountability.’”

He further analyzed: “The regulations are very detailed—for example, for investment-linked insurance products that could lead to principal loss, they require risk ratings and assessments of the policyholder’s risk tolerance. For life insurance products with uncertain benefits, if premiums exceed a certain proportion of household annual income, a signed declaration from the policyholder is required before underwriting. Suitability management is also incorporated into annual consumer rights protection evaluations.”

Consumers are not powerless against ever-changing sales misguidance.

For consumers, “preventive measures” are the lowest-cost way to protect rights.

Yang Xiang offered professional advice: before purchasing, fully utilize the new regulations’ protections for those over 65, and encourage elderly consumers and their families to assert these rights and not be swayed by sales tactics. During the process, be cautious when signing—never sign blank contracts, and ask sales staff to clearly disclose surrender charges and fee deductions. Afterward, make good use of the cooling-off period and multiple dispute resolution channels. If misled, promptly collect evidence such as chat records and recordings, negotiate with the financial institution first, and if unsuccessful, report to regulators.

Yang Xiang concluded that under the dual penalty system and strict regulation, the cost of violations for financial institutions will rise sharply, forcing the industry to reshape a compliance-driven model centered on customer needs. For consumers, understanding terms, keeping evidence, and timely rights protection remain the most effective ways to safeguard their “money bags.”