Union Life Insurance Co Ltd purchased seven land parcels in Shenyang, Liaoning province, for 243 million yuan ($38.6 million) to build retirement communities.

The Wuhan-based company opened a retirement community in Wuhan, Hubei province, in October. Policy holders have the option of residing in the communities.

According to Union Life's chairman Dai Hao, the retirement communities are targeting middle-class income earners over 55 years of age.

Union Life also built retirement communities in Hefei in Anhui province, and Nanning in the Guangxi Zhuang autonomous region. It also has plans to build communities in Beijing, Shanghai and Qingdao, Dai said.

According to a McKinsey & Co report, China is set to become the world's second-largest life insurance market in 2020 — up from fifth in 2010.

Other insurers such as Taikang Life and China Life are also exploring opportunities in this sector.