Financial Services Commission Announces '2025 Major Business Promotion Plan'
Includes Five-Set Package of Retirement Support Insurance
The financial authorities are pushing forward with a plan to securitize death insurance benefits, which are post-mortem income, into pre-mortem income. They will also introduce insurance systems related to retirement preparation, such as adding preferential interest rate items for the elderly in insurance policy loans.
On the 8th, the Financial Services Commission announced the '2025 Major Work Promotion Plan' containing these details. Through this plan, the FSC intends to promote the 'Five-Set Retirement Support Insurance.'
The plan is to securitize death insurance benefits, which are post-mortem income, into pre-mortem income to be used as a means of retirement preparation for low-income elderly people. The targeted insurance contracts are limited to whole life insurance policies where the policyholder and the insured are the same person and the premium payments have been completed. Currently, the number of whole life insurance contracts with completed premium payments that can be securitized is approximately 3.62 million.
There are two types of death insurance benefit securitization plans: annuity type and service type. The annuity type pays a certain amount calculated based on a fixed percentage of the death benefit in the form of an annuity. The service type provides customers with services in kind instead of an annuity, such as nursing home admission rights and healthcare usage rights.
The Individual Savings Account (ISA) and pension accounts will also be given a 'medical savings account' function. Currently, when withdrawing early from an ISA, the contribution limit is not restored by the withdrawn amount. The FSC plans to restore the contribution limit if the withdrawal is for medical expenses. When medical expenses are paid using a card linked to the account, it will automatically be recognized as a medical expense purpose.
A preferential interest rate item for insurance policy loans will also be newly established. Additional interest rates will be applied to elderly customers for vulnerable groups, existing high-interest product policyholders, and customers with high contributions to insurance companies. The detailed application criteria for preferential interest rates will be autonomously operated by each company according to the characteristics of contracts held by the insurer and customer preferential strategies.
The subscription and coverage period for indemnity insurance for the elderly and those with pre-existing conditions will also be expanded. By expanding the subscription target for indemnity insurance for the elderly and those with pre-existing conditions (from 70?75 years old to 90 years old) and the coverage age (from 100 years old to 110 years old), the plan is to strengthen medical expense coverage.
The activation of the trust business will also be promoted. This is based on the judgment that there are limitations in responding to the increasing demand for new asset management due to social structural changes such as aging and increased welfare needs. In the future, through trust contracts, it will be possible to set up a trust for all assets, receive annuities in the early elderly period, and continue to nursing care support and inheritance in the later period.
An FSC official said, "The five-set insurance package is currently being discussed in detail at the Insurance Reform Council," adding, "We plan to announce the finalized plan, including the implementation schedule, in February."
© The Asia Business Daily(www.asiae.co.kr). All rights reserved.
