Insurers rework whole life coverage to pay out for retirement, cancer care

Whole life insurance is no longer just about providing for loved ones after death. Insurers are introducing policies that let customers collect benefits while still alive, a way to supplement their retirement income.

The push into health care and retirement benefits comes as demand wanes for whole life insurance's original purpose: providing financial security after death. Traditionally, such policies helped families cover everyday expenses and children's education costs after losing their main breadwinner.

However, longer life expectancy and the rise of dual income and single-person households have steadily eroded demand for whole life insurance.

First-year premiums for whole life insurance fell 5.7 percent on year to 341.7 billion won ($256 million) in the first half of this year, according to the Korea Insurance Development Institute.

To cater to customers’ changing needs, Hanwha Life Insurance said Oct. 14 it had launched “Hanwha Life Whole Life Insurance for When You Need It” (translated), which lets policyholders recover all the premiums they have paid to cover retirement expenses or major life events, including their children’s weddings. Policyholders can receive the money in a lump sum or in installments over two to eight years.

Unlike the partial withdrawal option on conventional whole life policies, Hanwha’s product keeps the remaining death coverage in force for life even after all the money earmarked for living expenses has been withdrawn. During policyholders’ 40s to 60s, when death coverage matters most, the death benefit also rises over time to as much as 210 percent of the original amount.

Samsung Life Insurance on Oct. 14 began selling its “Samsung Golden Whole Life Insurance” (translated) policy, which adds cancer protection to whole life coverage. Customers who choose the cancer coverage option can stop paying premiums if diagnosed with cancer during the payment period. It also offers an additional withdrawal allowance on top of the standard 100 percent of premiums paid.

Kyobo Life Insurance has introduced a “refillable” coverage model through its “Kyobo Refill Health Whole Life Insurance” (translated) policy. It covers recurring treatment expenses for cancer, brain disorders, heart disease and dementia, with a dedicated so-called health account that provides up to 10 times the policy's base insured amount. The treatment coverage limit is replenished every 20 years.

NH NongHyup Life Insurance offers a similar feature through its “Health Refill NH Cancer Whole Life Insurance” (translated) policy. Customers diagnosed with cancer receive an upfront payout equal to 100 percent of the insured amount, while a refillable death benefit subsequently restores their death coverage to its original insured amount.

“By extending whole life insurance coverage to benefits that policyholders can access while alive, insurers are responding to more diverse customer needs,” said an insurance industry source. “The priority is to retain the core death benefit that protects families' financial stability.”

Some analysts also see the diversification of whole life insurance products as an attempt by life insurers to find new growth sources after restrictions were imposed on sales of so-called 700 whole life insurance policies. These products refund 100 percent of premiums paid to policyholders who cancel after seven years of payments and had become major revenue drivers for life insurers thanks to their popularity among consumers.

Their appeal lay in letting customers recover their premiums relatively quickly while keeping the death coverage offered by whole life insurance. Premium income from these policies at 12 insurers reached 950 billion won last year, more than triple the 310 billion won recorded in 2024.

But insurers have stopped selling new policies after regulators moved to rein in fierce competition. The Financial Supervisory Service concluded last month that consumers could confuse the products with savings-type insurance and that mass policy surrenders in the seventh year could threaten insurers' financial soundness.

“The suspension of 700 whole life insurance sales has left insurers with no choice but to develop alternatives and diversify their sales strategies,” said an insurance industry source.

BY OH HYO-JEONG [[email protected]]