Variable Insurance Riding Stock Trends... First Quarter Initial Premiums Reach 1.5 Trillion Won, 'Half of Last Year's Level'

'Miunori' Variable Insurance Revival Takes Flight
Cancellations Increase... Fund Changes Recommended

[Asia Economy Reporter Oh Hyung-gil] Variable insurance, once considered the black sheep due to poor returns, is making a comeback this year. Although it was overlooked because of lower returns compared to direct investments, the prolonged low-interest-rate environment and a booming stock market have led to a surge in subscribers.

Conversely, while the number of subscribers seeking to cancel their policies after achieving high returns is increasing, experts advise focusing on managing returns through fund changes rather than cancellations.

According to the Korea Insurance Development Institute on the 13th, the first-quarter initial premium for variable insurance recorded 1.5876 trillion won. This is a 166.5% increase compared to 595.5 billion won in the same period last year. This amount corresponds to half of last year's total initial premium of 3.1044 trillion won.

In particular, the initial premium for variable universal insurance exceeded 1 trillion won, soaring 208.8% compared to the same period last year, and variable annuities also jumped 155.0% to 504.8 billion won, leading the growth of variable insurance. Variable whole life insurance increased by 58.7% to 5 billion won.

The trend for variable insurance began to change last year. The initial premium for variable insurance was 1.786 trillion won in 2018 and maintained a similar level at 1.8163 trillion won in 2019. Last year, it nearly doubled to 3.1044 trillion won, signaling a spectacular revival.

Variable insurance is a performance-linked product where the premiums paid by the policyholder, excluding business expenses and risk premiums, are separately accumulated and managed in funds, and the insurance payout varies according to the performance. Variable whole life insurance provides death benefits that fluctuate based on fund performance.

Variable universal insurance is characterized by the addition of flexible deposit and withdrawal functions. Variable annuities are designed to provide pension payments from accumulated fund reserves for securing retirement living expenses.

On the 13th, dealers are working in the Hana Bank dealing room in Euljiro, Seoul, where the KOSPI index is showing an early morning upward trend. The index started at 3,253.24, up 6.77 points (0.21%). Photo by Moon Honam munonam@

The biggest reason behind the recent revival of variable insurance lies in the stock market. In January this year, the KOSPI surpassed 3,000 points for the first time ever, and with the stock market boom continuing since the COVID-19 pandemic, variable insurance with improved profitability has started to attract attention. In particular, sales of variable insurance are increasing among small and medium-sized companies such as Mirae Asset Life, MetLife Life, DGB Life, Heungkuk Life, and Prudential Life.

As of the end of last month, the 5-year return on variable insurance equity funds recorded an average of 101.6% for Mirae Asset Life. This was followed by ▲IBK Pension Insurance (93.0%) ▲MetLife Life (88.8%) ▲Fubon Hyundai Life (87.6%) ▲Kyobo Life (82.6%), achieving solid results. Additionally, after last year's private equity fund incident, variable insurance has been introduced as an alternative product through bancassurance channels, contributing to sales promotion.

Although consumers seeking to cancel variable insurance have increased recently due to improved returns, experts advise against cancellation for securing retirement income.

Kim Se-jung, a research fellow at the Korea Insurance Research Institute, said, "Variable annuities are more suitable as a long-term retirement income security tool rather than a short-term investment vehicle," adding, "Insurance companies should strengthen services such as diversifying fee structures, expanding investable funds, and encouraging active fund management to promote long-term retention of variable insurance subscribers."

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