[Getting Insurance Savvy] Why Has Whole Life Insurance That Pays More Benefits Become a Cautionary Product?

Increasing Whole Life Insurance... Insurance Benefits Increase After a Certain Period
Be Careful When Switching... You May Suffer Losses if You Cancel Early

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[Asia Economy Reporter Oh Hyung-gil] The Financial Supervisory Service recently issued a consumer alert regarding increasing whole life insurance. Increasing whole life insurance is a product that can return high death benefits and surrender values if maintained for a long period.

Despite these advantages, it was pointed out that during the premium payment period, coverage is smaller compared to standard whole life insurance, and the surrender rate is also low in case of early termination, requiring consumer caution.

According to the Financial Supervisory Service, increasing whole life insurance accounted for about 22% of all new whole life insurance contracts in the first quarter of this year, an increase of 5.3 percentage points compared to 16.9% in the same period last year.

Whole life insurance pays the same death benefit throughout the insurance period. In contrast, increasing whole life insurance, as the name suggests, increases the insurance benefit after a certain period following enrollment. It is a unique product introduced by insurance companies as the whole life insurance market has recently become saturated.

However, it should be noted that the premium for increasing whole life insurance is more expensive than level whole life insurance because the death benefit increases.

In particular, if you cancel your existing whole life insurance and switch to increasing whole life insurance, financial and non-financial disadvantages may occur. Also, if the existing insurance is a no or low surrender value type, the surrender value may be very low in case of early termination during the switching process.

While it is advantageous to consumers because if maintained for a long time, the total premiums paid can be fully returned and the death benefit is high, in case of early termination, neither the increasing death benefit nor the surrender value can be recovered.

An insurance industry official advised, "Increasing whole life insurance is a product that can accumulate a large sum of money if maintained for a long time because both the death benefit and surrender value increase. However, since the surrender rate can be low in case of early termination, you should consider your financial capacity before subscribing."

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