[Becoming an Insurance Insider] Paying More Premiums While Trying to Get 'Insurance Remodeling'

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[Asia Economy Reporter Oh Hyungil] Office worker Choi Cheolhwan (38, pseudonym) received consulting from an acquaintance who is an insurance planner and canceled his existing whole life insurance with a 4.5% assumed interest rate to switch to a new whole life insurance policy. However, a few months later, he realized that the canceled insurance had cheaper premiums and better riders. Mr. Choi tried to return to his original whole life insurance but regretted it late after being told that re-enrollment was impossible due to his age.

Sales tactics that induce switching to new products under the pretext of remodeling insurance are widespread. The Financial Supervisory Service recently issued a consumer warning at the 'caution' level, stating that consumer damage is occurring due to the rapid increase in 'whole life insurance switching (remodeling)'.

Insurance remodeling causes consumer damage because sufficient explanations are not provided regarding the possibility of principal loss when canceling existing insurance and comparisons between cancellation and new contracts.

Recently, insurance remodeling is mainly conducted through new channels such as cable TV, internet portals, and YouTube. They pretend to provide insurance consultations but deceive customers into switching to products with similar coverage but cheaper premiums.

The Financial Supervisory Service emphasized that monetary losses such as overlapping business expenses occur during the process of switching whole life insurance, making irrational decision-making highly likely. Therefore, if you want to increase the death benefit, it is better not to cancel the existing whole life insurance contract but to additionally subscribe to a new whole life insurance policy.

In particular, if paying premiums is difficult, it is recommended not to cancel the existing whole life insurance contract but to use the 'reduced paid-up insurance' system, and if a lump sum (urgent funds, etc.) is needed, rather than canceling the existing whole life insurance contract, to use the insurance policy loan system. Insurance policy loans can be borrowed within the surrender value range, and loan screening procedures such as credit rating checks are omitted, with no early repayment fees.

Additionally, when proceeding with whole life insurance remodeling, it is necessary to check ▲ whether the total premium amount increases due to remodeling ▲ whether there are any disease riders that may lead to rejection at the time of application ▲ whether the assumed interest rate decreases due to remodeling, the Financial Supervisory Service advised.

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