This year, a set of five 'retirement support insurance' plans will be launched for national retirement preparation. In particular, the insurance industry has shown a positive response to the liquidity measure that allows policyholders to access death benefits while still alive, viewing it as a means to enhance the diverse utilization of insurance.
According to the Financial Services Commission on the 28th, it has recently decided to promote a set of five retirement support insurance plans for national retirement preparation in its '2025 major business promotion plan.' The five plans include: ▲ liquidation of death benefits ▲ granting a 'medical savings account' function to individual comprehensive asset management account (ISA) and pension accounts ▲ establishing preferential interest rates for insurance contract loans ▲ expanding the target audience and coverage age for indemnity insurance ▲ promoting the activation of trust businesses.
◇ Death benefits can be used while alive
Among these, the most notable aspect is the liquidity of death benefits. The Financial Services Commission plans to utilize the death benefits, which are posthumous income, as a means of retirement preparation for low-income elderly individuals by converting them into pre-death income. The targeted insurance contracts are limited to those where the policyholder and the insured are the same and the premium payments are completed for term life insurance death benefits. Currently, there are about 3.62 million term life insurance contracts that have completed premium payments and can be liquidated.
This will be provided in two ways: 'pension type', which pays a certain percentage of the death benefits as an annuity, and 'in-kind service type', which offers services such as nursing home admission rights and healthcare usage rights instead of cash benefits.
An industry insider noted, "From the insurance company's perspective, the significance lies in being able to encourage consumers who have subscribed to life insurance to access funds for living expenses if they are currently facing difficulties. Previously, while it was possible to receive benefits, the complications of business expenses and taxes made it very challenging."
◇ Medical savings accounts and preferential loan interest rates are also being promoted
Looking at the remaining four new items, the convenience of withdrawing medical expenses from ISAs and pension accounts will be enhanced by providing a 'medical savings account' function. Existing ISAs do not restore the contribution limit when withdrawals are made before the term. The Financial Services Commission will restore the contribution limit when withdrawals are made for medical expenses. If medical expenses are incurred using a card linked to the account, they will be automatically recognized for medical purposes.
The preferential interest rate for insurance contract loans will also be newly established. Additional charges will be applied for elderly customers who support vulnerable groups, existing contract holders of high-interest products, and customers who significantly contribute to the insurance company. The specific criteria for applying preferential interest rates will be operated autonomously by each company based on the characteristics of the contracts they hold and their customer loyalty strategies.
In line with the aging era, the coverage age for indemnity insurance will be expanded from the existing 70-75 years to 90 years, and the coverage age will also be increased from 100 years to 110 years.
Additionally, the activation of the trust business will be promoted. This is based on the judgment that there are limitations in responding to the growing demand for new asset management due to societal structural changes, such as increased needs for aging and welfare. In the future, it is planned to establish a trust where all assets are placed into the trust through a trust contract, allowing for pension payments in the early years of old age and caretaking support and inheritance in later years.
The five insurance plans are currently being discussed in detail at the insurance reform meeting attended by financial authorities, academia, related organizations, research institutions, insurance companies, and insurance associations. A confirmation plan, including the timing for implementation, is scheduled to be announced next month.
An industry insider remarked, "We have opened up various channels for insurance products that were evaluated as having low utilization, including life insurance. This will bring about positive effects that both the industry and consumers are interested in."