Cases of misselling dollar-denominated insurance are surging as the won-dollar exchange rate rises.
The Financial Supervisory Service on the 15th issued a consumer alert advising caution to prevent harm to consumers seeking to enroll in dollar-denominated insurance.
Dollar-denominated insurance is a product in which premiums are paid in dollars and benefits are received in dollars. Payouts are determined based on factors such as yields on overseas bonds. When the exchange rate rises, the premiums paid increase, and when the exchange rate falls, the benefits received decrease. Even if overseas interest rates fall, the credited interest rate for premium accumulation falls, reducing the benefits received.
There are growing cases of dollar-denominated insurance being sold like a currency investment product. A person surnamed A said they were told it was a product for investing and saving in dollars and signed up to use it for children's education expenses, but later learned it only pays a basic death benefit and filed a complaint with the Financial Supervisory Service (FSS).
From January to October last year, 95,421 dollar-denominated insurance policies were sold. That is more than double compared with 2024 (40,594). Earned premiums also reached 2.8565 trillion won from January to October last year.
The Financial Supervisory Service (FSS) noted that dollar-denominated insurance is not suitable as a product for currency gains because only the amount after deducting premiums and expenses used to cover risks such as death is accumulated.