FSS Releases Common Complaint Cases and Key Points from the Insurance Enrollment Process
"Claims of Not Being Informed" Cannot Be Accepted if Signature or Recording Is Confirmed
Carefully Review the Comparison Guide and Related Documents When Switch
In 2023, Mr. A was introduced to a product described by an insurance planner as a "lump-sum savings plan" and mistakenly believed it to be a savings insurance policy, ultimately enrolling in a whole life insurance policy. According to a financial authority investigation, the planner had arbitrarily written information on the insurance certificate that could be mistaken for a savings insurance policy. The planner also directly highlighted in red the answers Mr. A should provide on the monitoring script and delivered it to him. As a result, the planner was sanctioned for incomplete sales, and Mr. A's insurance contract was canceled as he requested.
On December 17, the Financial Supervisory Service released examples of frequent complaints and precautions that arise during the insurance enrollment process.
Mr. B, after receiving explanations about guaranteed interest rates and pension conversion, believed he was enrolling in a pension savings product and purchased an insurance policy. However, he later discovered that the policy was actually a whole life insurance product primarily focused on death benefits and demanded contract cancellation. The Financial Supervisory Service's investigation confirmed that Mr. B had handwritten his signature on the product description, acknowledging that he had listened to and understood the key contract details, and had also submitted a complete sales monitoring response form. Unless Mr. B can provide separate objective evidence to the contrary, it is difficult to conclude that there was a problem with the insurer's application process.
Mr. C, while enrolling in whole life insurance, was told that after paying premiums for five years and then waiting another five years, he would be eligible for both death benefits and pension payments. After fulfilling these conditions, Mr. C converted the policy to a pension. However, he later filed a complaint, claiming it was unfair that the insurer informed him he would not receive death benefits. Pension conversion in whole life insurance is a special provision that allows the policyholder to receive a pension from the surrender value of the main contract and any selected riders, instead of death benefits. Policyholders should be aware that death benefits may be forfeited when converting whole life insurance to a pension.
Mr. D was told that after paying premiums only during the two-year mandatory payment period, coverage would continue without additional payments, and so he enrolled in a universal insurance policy. After fulfilling the mandatory payment period, Mr. D stopped making premium payments. Subsequently, he received a notice from the insurer that his contract would be terminated due to non-payment of premiums. Mr. D claimed this was unfair and contrary to the explanation he had received, but his claim was not accepted. This was because his handwritten signatures on the application and product description, as well as his responses during complete sales monitoring, confirmed that the insurer had fulfilled its duty to explain key contract details. The product description also clearly stated that if premiums are not paid, insurance benefits or surrender values may decrease, and the contract may be terminated.
Universal insurance allows for premium payments to be adjusted in amount and timing after the mandatory payment period. If premium payment is deferred after the mandatory period, the monthly premium is automatically deducted from the surrender value. However, this should not be misunderstood as a "premium waiver." If the surrender value is insufficient to cover the premiums due to non-payment or deduction of principal and interest from policy loans, the contract may be terminated.
Ms. E changed her insurance contract after being told by the insurance planner that new coverage, not included in her previous policy, would be added. However, she later discovered that the new policy was identical to her previous one, with no additional coverage, and demanded contract cancellation. Her request was denied because her handwritten signatures on the application and the "comparison guide for insurance contract transfer" form, as well as her responses during complete sales monitoring, confirmed that she had answered appropriately. When switching insurance policies, it is important to carefully review and fully understand the application and the comparison guide for insurance contract transfers before signing.
A Financial Supervisory Service official stated, "Although complaints during the insurance enrollment process are on the decline, grievances continue to arise regarding policies being explained as pension or savings insurance instead of protection-type insurance, or claims that planners did not follow proper sales procedures," and added, "We will continue to release major complaint cases to help prevent consumer harm."
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