"Immediate Annuity Lawsuit First Trial, Court Ruling Changes... Outcome Unpredictable"

[Asia Economy Reporter Oh Hyung-gil] The court has issued rulings opposite to previous ones regarding the 'Immediate Annuity Lawsuit,' leading to analyses that predicting future lawsuit outcomes is difficult.

According to the report titled 'Review of Recent Judgments Related to Immediate Annuity Insurance' released on the 24th by the Korea Insurance Research Institute, most first-instance lawsuits related to immediate annuities resulted in insurance companies losing, but recently, Samsung Life Insurance and Hanwha Life Insurance each won their cases.

Immediate annuity insurance is a product where the policyholder pays a lump sum premium to the insurer and immediately (usually from the month following the payment) receives a fixed monthly insurance benefit (annuity).

Among these, the inheritance maturity type immediate annuity pays the full amount of the previously paid premium as the maturity benefit at maturity. Therefore, a certain amount of the interest earned from the publicly announced interest rate is separately deducted as funds for future maturity benefit payments, and the remaining amount is paid as the survival annuity (monthly annuity amount).

Although the deduction of funds for maturity benefit payments in the calculation of the monthly annuity amount was reflected in the premium and reserve calculation method document, it was not explicitly stated in the policy terms and conditions, raising the issue in the immediate annuity lawsuits whether this content can be considered part of the insurance contract.

Previous rulings held that the calculation method document was not incorporated into the insurance policy, but recent rulings have stated that the part concerning the calculation of the monthly annuity amount in the calculation method document can be considered part of the insurance policy.

The court cited reasons such as the instruction phrase in the calculation method document that the pension contract reserve, which is the basis for calculating the monthly annuity amount, is calculated according to the calculation method document, and the statement in the subscription design document that the monthly annuity amount is calculated according to the method specified in the calculation method document.

It also judged that the insurer failed to fulfill the obligation to explain that a portion of the interest earned from the publicly announced interest rate is deducted as funds for maturity benefit payments.

However, the recent ruling judged that the insurer provided sufficient explanation for the policyholder to decide whether to enter into the insurance contract.

The basis for this judgment was that the content 'deducting funds for maturity benefit payments from the interest earned from the publicly announced interest rate' itself is not subject to the duty of explanation, and that the insurer explained the approximate monthly annuity amount the policyholder would receive, the possibility of changes in the monthly annuity amount due to fluctuations in the publicly announced interest rate, and the difference in monthly annuity amounts between the inheritance maturity type and the inheritance whole life type.

Baek Young-hwa, a research fellow at the Korea Insurance Research Institute, said, "First-instance courts have made different judgments on whether the deduction of funds for maturity benefit payments in the calculation method document constitutes part of the insurance policy and whether the insurer fulfilled its duty to explain to the policyholder," adding, "Since judgments may vary depending on the facts of individual cases, it is necessary to closely monitor the trends of ongoing lawsuits."