Shinhan Life Launches Industry's First Korean-Style Tontine Annuity... Higher Payouts the Longer You Live

Annuity Product Designed to Address Longevity Risk

Shinhan Life announced on January 7 that it has launched its first new product of the year, the "Shinhan Tontine Annuity Insurance," which offers higher pension payouts the longer you live.

The tontine annuity is a representative pension model that redistributes the accumulated funds of deceased or withdrawn policyholders to surviving members, thereby addressing longevity risk. Due to the drawback that policyholders who die or surrender their policy before the annuity begins cannot receive a refund of their premiums, this type of product had not previously been introduced in Korea.

The newly launched Shinhan Tontine Annuity Insurance by Shinhan Life pays out the greater of either the total premiums paid or a certain percentage of the policyholder’s accumulated funds, even if the policyholder dies before the annuity start date.

The "Partial Payment on Death or Surrender" type offers lower surrender and death benefits before the annuity begins compared to the "Standard Type," but uses these funds to significantly increase the annuity payout at the time the annuity starts.

If a policy with an insurance period of 20 years or more before the annuity begins is maintained until the annuity start date, a "Bonus at Annuity Start" of up to 35% of the "basic premiums already paid" is provided, depending on the duration. Shinhan Life expects that customers will be able to secure a more stable retirement fund through the compound annual effect of the declared interest rate linked to market rates, the annuity start bonus, and the tontine effect, which increases the annuity amount the later it is received.

The eligible age for enrollment is from 15 to 55, and the annuity start age ranges from 30 to 95. The minimum deferral period after enrollment is five years. Monthly premiums start at 300,000 won or more, and the premium payment period can be freely chosen for 10 years or longer.

Considering that this is the first product of its kind to be introduced in the industry, Shinhan Life plans to operate various initiatives to ensure that all consumers fully understand the product features before enrolling, including ▲ enhanced training for complete sales competency ▲ a monitoring system to improve customer understanding of the product ▲ and an in-house product sales qualification system.

A Shinhan Life representative stated, "The role of private pensions, which complement the public pension system, is becoming increasingly important for a more prosperous second act of our customers' lives," adding, "We will develop innovative products that support stable retirement income in line with domestic regulations and consumer protection standards, and take the lead in revitalizing the domestic pension market."