The Financial Supervisory Service said on the 23rd that a total of 1,262 applications had been filed from Oct. 30 to the 15th of this month after the introduction of the death benefit securitization system. Based on the first year, total payments amount to 5.75 billion won, and the average securitized amount per case is about 4,558,000 won. Converted to a monthly basis, that is about 379,000 won, roughly 20% of the 1.92 million won in monthly appropriate living expenses for old age cited by the Korea Retirement Income Panel Survey.
The average age of applicants is 65.3, the average securitization ratio chosen by applicants is 89.4%, and the average securitization period is 7.8 years. It is analyzed that, even for relatively small insurance payouts, there is a tendency to use the system by raising the securitization ratio and shortening the payment period.
The financial authorities will expand death benefit securitization products from a limited number of existing life insurers to all life insurers starting Jan. 2 next year. The death benefit securitization products currently operated by five life insurance companies will be launched by 19 life insurers next year, excluding a few companies without eligible contracts.
As of the end of January this year, eligible contracts for death benefit securitization number 600,000, with a coverage amount totaling 2.56 trillion won. Consumers holding such contracts will receive individual guidance from the 24th via text message or KakaoTalk, depending on the insurer. The number of eligible contracts has decreased compared with 759,000 at the end of last year due to policy loans and policy cancellations, but if a policy loan is repaid, death benefit securitization can be carried out immediately.
Death benefit securitization applies to both whole life insurance policies sold in the past and those newly sold. As the number of policyholders reaching age 55 and fully paid-up policies naturally increases, the number of people eligible for death benefit securitization is expected to continue to rise.
At the beginning of the program, only in-person applications through customer centers and branches were allowed to ensure smooth on-site adoption, but non-face-to-face applications will also be allowed to improve access for policyholders living in regions with fewer customer centers or branches. Even when applying non-face-to-face, consumers must be provided with a comparison table of simulation results by securitization ratio and payment period, along with a detailed explanation of key points.
Non-face-to-face enrollment will be implemented sequentially by insurers as they complete preparations. Hanwha Life and Mirae Asset Life Insurance will start on Jan. 2 next year, Shinhan Life on Jan. 30, and iM Life plans to begin operations in the first quarter of 2026. Other life insurers are also reviewing their implementation plans.