Securitization of Death Benefits to Expand to All Life Insurers Next Year... New Insurance System Changes for the New Year

Scope of Simple Insurance Agency Sales Expanded to Include Life and Third-Sector Insurance
Children's Insurance Premium Discounts Available for Childbirth and Parental Leave Starting April Next Year

Starting next year, products that allow policyholders to securitize a portion of their whole life insurance death benefits and use them as retirement funds will be expanded and launched by all life insurance companies. The range of products sold by simple insurance agencies will also be expanded from only non-life insurance to include life insurance and third-sector insurance.

The Korea Life Insurance Association and the Korea Non-life Insurance Association announced the "Insurance System Changes for 2026" on December 30.

The death benefit securitization product, which was first implemented by five major life insurers in October, will be launched by all life insurance companies starting January 2. Securitization of death benefits can be applied for from age 55. Policyholders can freely choose the proportion and segment to be securitized, allowing for customized use according to individual financial circumstances.

From the new year, the range of products that simple insurance agencies can sell will be expanded from only non-life insurance to include life insurance and third-sector insurance, improving consumer accessibility.

Starting in April next year, discounts will be offered on children's insurance premiums for childbirth or parental leave. Policyholders can also defer premium payments for protection-type insurance for six months or one year, and defer repayment of policy loan interest for up to one year. The benefit applies if the policyholder or their spouse has given birth within one year from the date of birth or is on parental leave.

From January, losses caused by electric vehicle fires will also be covered. New products will be launched that provide liability coverage for bodily injury and property damage caused by fires, explosions, or electric shocks at electric vehicle charging facilities. The compensation limit is 150 million won per person for bodily injury and 1 billion won per accident for property damage.

Managers of electric vehicle charging facilities are required to purchase insurance that covers liability for bodily injury and property damage caused by fires, explosions, or electric shocks at charging facilities. From January 1, anyone who operates a new electric vehicle charging facility without insurance will be fined 2 million won.

Consumer protection will be strengthened, as coverage will include not only typical fires but also cases where the connector of a charging facility melts or deforms due to overheating or electrical failure, causing damage to the vehicle body.

Starting in the first half of next year, simple inquiries and non-disputed complaints, such as changes to premium payment methods, which were previously handled by the Financial Supervisory Service, will be transferred to the insurance associations for faster processing.

Tax support for private pensions will also be strengthened. For whole life contracts that pay annuities until death, the withholding tax rate on pension income will be reduced from 4% to 3%. The deduction rate for pension payments received after more than 20 years of retirement income will be increased from 40% to 50%.