As the popularity of 'short-term payment life insurance,' which was a mid- to long-term investment product, declines, life insurance policies aimed at providing funds for gift tax and inheritance tax purposes have been continuously launched in the past month. Life insurance is a product that pays a death benefit when the policyholder passes away, and the inheritance and gift tax life insurance is designed to provide a death benefit up to five times larger than that of existing products. Insurance companies are promoting that policyholders will receive a larger death benefit to pay gift tax. The identity of life insurance is shifting from savings to inheritance and gifts.
According to the insurance industry on the 11th, Samsung Life Insurance and Kyobo Life Insurance are the companies that have begun to sell inheritance and gift tax life insurance in earnest. Samsung Life Insurance launched the All-Back Life Insurance product in November last year with the description 'inheritance life insurance.' Kyobo Life Insurance also released the Kyobo Inheritance Insurance the same month.
Inheritance and gift tax life insurance is a low-reimbursement product that is more expensive than traditional life insurance and offers a smaller surrender benefit when the contract is canceled. On the other hand, the death benefit paid upon death is larger. The main characteristic is that it provides a larger death benefit while reducing other protections and benefits.
As Samsung Life Insurance and Kyobo Life Insurance introduced inheritance and gift tax life insurance, small to mid-sized insurance companies are also rushing to launch similar products. Some insurers have increased the death benefit by up to five times and added features such as pension conversion, initiating intense competition.
Looking at the MAX Life Insurance Seven High Pick product newly launched by Qubone Hyundai Life Insurance this month, the death benefit increases by 20% each year for 20 years starting from the fifth year of joining, totaling up to 500%. If a death benefit of 100 million won is received, 250 million won will be paid after 25 years of joining. Since the subscription limit is 1 billion won, it is possible to receive up to 500 million won.
Last month, Tongyang Life Insurance launched 'Five Times Happier Life Insurance' for sale. This product also offers a death benefit that increases up to five times, with the timing of receiving these benefits accelerated to 15 years after joining. iM Life also released the Plus Seven UP product, which features a five-fold increase in the death benefit, the same month.
Additionally, Shinhan Life Insurance launched this month the Shinhan Life Insurance Seven Plus Gold, which increases the death benefit by 20% each year after seven years of joining, while Mirae Asset Life Insurance has been re-releasing and selling the Heritage Life Insurance previously sold for gift tax purposes.
It is difficult to say that life insurance for the purpose of securing gift and inheritance taxes is an entirely new product. Life insurance is designed to help provide the death benefit to families left behind when the policyholder dies, ensuring their basic livelihoods. In the past, life insurance aimed at tax savings and asset transfer has also been sold.
The reason insurance companies have started aggressive marketing for inheritance and gift tax life insurance is attributed to the decreased popularity of short-term payment life insurance intended for savings. Previously, insurance companies paid back around 130% of the premiums paid when customers canceled their contract after 10 years. However, due to the financial authorities pointing out heated competition and the reduction in interest rates, they have not been able to maintain as high a refund rate as in the past.
As the popularity of their mainstay, life insurance, decreased, the life insurance industry has expanded the concept of life insurance by adding various functions. It is diversifying into products that cover serious illnesses in addition to simple death coverage, investment opportunities, gifts and inheritance preparations, and retirement preparations. The insurance industry believes that since the primary purpose of life insurance is the death benefit, there will not be significant issues in the competition for inheritance and gift tax life insurance.