A new model of elderly care has taken off the ground in China. In four cities in the country, elderly people can mortgage their property with an insurance company in exchange for a monthly pension payment.
Going in for the plan will however give the company the right to dispose off the property after its owners' death.
A pension in exchange for your home.
Those above the age of 60 in some cities in China, now have the option of receiving a pension if they mortgage their home to an insurance company.
The pension would be directly proportional to the value of their property. Some have already signed up to this plan.
Officials say it is a way out for those unable to afford the costs of living a life with dignity, in their twilight years.
"This fills in the gaps in the current pension system. It can help those whose children are not around, who are disabled or who live alone. This is an exploratory attempt to try something new in the existing pension system," said Wu Xinggang, Life Insurance Division.
The regulators initiated the trial program last year, and green lighted the first insurance product late last month. The product is provided by Happy Life Insurance and is available in four cities - Beijing, Shanghai, Guangzhou and Wuhan.
Among other issues, the program could come up against strong headwinds in the form of Chinese societal norms.
"I think many people have a certain mindset. Some elderly people don't accept the idea of a pension. Sometimes their children don't accept the idea because they think they aren't fulfilling their obligations towards their parents. It takes time to accept new ideas," Wu Xinggang said.
Analysts say besides this mindset, related laws are needed, including property valuation, to reduce costs for insurers.
But they say the pension market is still in its infancy in China, and there is hope that similar products will meet the needs of 178 million elederly citizens above the age of 60 years.
