The balance of insurance policy loans (policy loans) has increased from 68.1 trillion won at the end of 2022 to 71.6 trillion won at the end of last year, while the number of subscribers who are disadvantaged due to a lack of understanding of important policy provisions is rising. A policy loan refers to a loan taken out against the surrender value of an insurance policy, which does not require a separate review.
The Financial Supervisory Service announced consumer precautions on the 1st, stating that if policy loans are taken out from pension insurance and not repaid, pension payments may be restricted. Once pension payments begin, the contract for pension insurance cannot be terminated. Because the loan period is limited to the insurance period before the start of the pension, repayment of the policy loan is necessary to receive a pension. However, in the case of certain types of pension insurance that pay out pensions over a fixed period, the pension can begin if the pension fund is greater than the loan principal and interest.
If the interest on the policy loan is unpaid, late interest will not be charged, but it is important to remember that unpaid interest will be added to the loan principal. Since unpaid interest is included in the loan principal, the interest rate is applied based on this, meaning the longer the payment is missed, the greater the interest burden becomes. If interest is unpaid for a long time and the principal and interest exceed the surrender value, the insurance policy may be terminated early.
If the policy loan signer and the depositor who pays the interest are different, the depositor must directly apply for the termination of the automatic payment. Even if the loan is repaid, if the automatic payment is not terminated, interest may automatically be paid for future new loans.