Canceled Variable Universal Life Insurance Trusting Agent's Words, Lost 50 Million Won (Comprehensive)

Product Description by Agent Differs from Insurance Contract Facts
Happy Call Recordings and Handwritten Signatures Exploited by Insurers and Agents to Avoid Responsibility
Perceived as Routine Procedure... Easy Consent May Lead to Harm

[Asia Economy Reporter Oh Hyung-gil] Jeong Mong-jin (68, pseudonym), who runs a small business, recently canceled his whole life insurance policy and raised an objection against Insurance Company A after the refund amount was less than expected. Three years ago, Jeong was introduced to a 'variable whole life insurance' policy by agent B, who claimed it was a better deal. Jeong said, "I switched because B explained that if I paid premiums for at least three years, the surrender value would be no different from my existing insurance."

However, despite paying premiums for over three years, the amount refunded was only about one-third of the expected refund (88 million KRW), at 22.5 million KRW. Insurance Company A rejected the objection, citing recorded happy call conversations confirming Jeong’s understanding that he was purchasing whole life insurance, and the contract documents containing handwritten signatures with expected refund amounts, stating "there is no procedural problem."

Jeong expressed frustration, saying, "The company completely ignores the claim that the agent misrepresented the product during sales, relying solely on the happy call recordings and handwritten signatures," and added, "They are deceiving consumers after engaging in improper sales practices."

Although handwritten signatures and happy call recordings were mandated as 'safety measures' to ensure complete insurance sales, criticism has arisen that these measures are instead hindering consumers. Cases are increasing where recorded explanations and policy terms, despite differing from the agent’s verbal explanations, are being exploited by insurers or agents as a means to evade responsibility.

According to financial authorities and the insurance industry on the 7th, among 9,346 complaints related to life insurance sales last year, 63.0% were related to incomplete sales of whole life and variable insurance (33.7% whole life, 29.3% variable). This means that 6 out of 10 complaints were about whole life and variable insurance sales. Notably, while the total number of complaints decreased by 5.4% compared to the previous year, related complaints increased by 13.3%.

A significant portion of these complaints reportedly stem from issues related to happy call recordings and handwritten signatures. The happy call recording system was introduced in 2012 to prevent consumer damage caused by incomplete insurance sales.

It is a representative monitoring system that checks after the fact whether explanations were properly given during the sales process so that consumers can understand and purchase products. Insurers must call the policyholder during the withdrawal period to confirm important insurance details and record and store these calls.

Handwritten signatures are mandatory requirements during the insurance contract conclusion and solicitation process. The Financial Supervisory Service imposes sanctions if explanations of important contract details are omitted or if the policyholder’s handwritten consent signature is not obtained. The Commercial Act also stipulates that "life insurance on the death of another person requires that person’s written consent at the time of contract conclusion."

However, consumers often treat happy call recordings and handwritten signatures as routine procedures and agree easily, leading to ongoing cases of consumer harm.

The insurance industry consensus is that if the agent’s explanation differs from the insurance contract details, it is practically difficult to prove without directly recording the agent’s explanation or keeping related materials. Happy call recordings and handwritten signatures serve as evidence that sufficient explanations were provided at the contract stage.

In a recent case where a prosecutor decided not to indict an agent who sold 78 insurance policies over five years to a person with intellectual disabilities, happy call recordings and handwritten signatures were used as evidence that "there was no procedural problem in the insurance subscription process."

The Criminal Division 2 of the Ansan Branch of Suwon District Prosecutors’ Office filed a summary indictment with an 8 million KRW fine against the insurance agent on charges including quasi-fraud for selling 78 insurance products to a person with intellectual disabilities. The prosecution decided not to indict some cases where there was no procedural problem in insurance sales and insufficient evidence.

During this process, the insurer confirmed facts through happy calls, and the agent reportedly instructed the intellectually disabled person to say, "I have signed all handwritten signatures, listened to explanations, and received all policy documents," and to answer "yes" to questions.

The financial authorities also acknowledge that it is difficult to find clear solutions for insurance losses caused by discrepancies between the agent’s explanations and the insurance products.

In 2018, the financial authorities discussed mandating recordings of agent explanations with the insurance industry but ultimately abandoned the plan. Reasons included that it would restrict agents’ sales activities, cause customer resistance, conflict with contract documents and legal effects, and impose economic burdens related to managing recordings.

An insurance industry official advised, "Consumers should carefully verify whether the agent’s explanations match the insurance contract or policy terms, and if there are discrepancies, confirm with the insurer’s call center or another agent," adding, "It is important to keep records such as text messages or emails exchanged with the agent."

This content was produced with the assistance of AI translation services.