Stopped in less than a week after launch?..."Tteotdabang"-style insurance sales

KDB Life Suspends Sales of 'No Underwriting' Short-Term Whole Life
Life Insurers' Short-Term Whole Life High Refund Rate Sold-Out Marketing
Intense Competition for Single Room Hospitalization Rider Among Non-Life Insurers

Insurance companies are causing confusion among consumers by selling insurance in a flash-sale style. They stop sales or adjust benefits within less than a week after launching a product. Some insurance agencies are even using this tactic to conduct scarcity marketing.

According to the insurance industry on the 6th, KDB Life Insurance sent an official letter to nationwide corporate insurance agencies (GA) on the previous day, requesting them not to sell the 'No Underwriting Uri Modu Support Whole Life Insurance' starting from the 7th. This product was a new product ambitiously launched by KDB Life on the 1st. It attracted great attention by promising to insure people aged 50 to 75 regardless of the policyholder's medical history. It was also promoted as a product created for the insurance-disadvantaged groups. However, sales were abruptly stopped in less than a week after its launch.

This product is a short-term payment whole life insurance recently competitively launched by life insurance companies. Customers can choose a payment period of 5, 7, or 10 years, and from the 5th year after enrollment, the death benefit increases by 5% of the main contract insurance amount annually for 10 years. After 5 years of payment and 5 years of waiting, the refund rate is 126.2%.

KDB Life explained that sales were stopped for product readjustment, but there are also opinions that the product was initially introduced for a brief flash sale. This is because KDB Life launched the product after the Financial Supervisory Service (FSS) began on-site and written inspections of life insurers that triggered competition in refund rates for short-term payment whole life insurance. Even if sales are stopped, it creates a pretext that they had no choice but to comply with the FSS's pressure, and frontline agents can boost short-term sales through scarcity marketing. A KDB Life official stated, "This is a company decision unrelated to financial authorities," and added, "We plan to develop better products for insurance-disadvantaged groups."

Other life insurers are showing similar sales behaviors. They are readjusting the refund rates of short-term payment whole life insurance products, which were recently launched with refund rates in the 130% range, down to the 120% range while conducting scarcity marketing. When corporate insurance agency (GA) agents are asked about life insurance products recently, the first product they introduce is short-term payment whole life insurance. They encourage customers to catch the last train by highlighting the high compound interest effect and tax exemption benefits. An industry insider said, "It seems life insurers bowed their heads under the watchful eyes of the FSS, but if you look closely, they are mocking the crackdown," adding, "Refund rates in the mid-to-high 120% range are still numerous." In the GA industry, there are even reports that last month's sales performance of short-term payment whole life insurance far exceeded the usual annual performance thanks to this scarcity marketing.

On the non-life insurance industry side, a special contract product supporting single-room hospitalization fees at tertiary general hospitals has recently become an issue. Samsung Fire & Marine Insurance raised the daily limit for single-room hospitalization fees at tertiary general hospitals to 600,000 KRW starting this year for health insurance and child insurance. Previously, the special contract was only about 50,000 to 100,000 KRW. In response, KB Insurance and Meritz Fire & Marine Insurance introduced coverage up to 550,000 KRW last month. DB Insurance and Hyundai Marine & Fire Insurance also competitively introduced coverage up to 600,000 KRW between the end of last month and early this month.

As competition overheated, the Financial Supervisory Service stepped in. The FSS recently urged the non-life insurers that introduced these special contracts to refrain from overheated competition and requested them to consider lowering the single-room hospitalization fee limits. This is due to concerns that excessively high hospitalization coverage amounts could cause moral hazard by inducing unnecessary single-room hospitalizations. Accordingly, some non-life insurers decided to sell special contract products guaranteeing single-room hospitalization fees in the 600,000 KRW range only until the 8th. Amid this, agents are enthusiastically pushing last-minute sales, calling it a "special contract that will never come again."