FSS Restricts Sale of '700 Whole Life Insurance' Products by Life Insurers
Life insurance companies will face restrictions on selling products that allow policyholders to receive 100% of the surrender value after seven years from the policy start date.
On September 21, the Financial Supervisory Service announced the implementation of new guidelines regarding so-called "700 whole life insurance" products through its supervisory administration, effective immediately.
These products reach a 100% surrender value rate from the seventh year after enrollment. Previously, there were concerns that consumers might mistake these for savings-type insurance products.
The Financial Supervisory Service has instructed that, when designing such products, the surrender value should be set at the same rate as the standard whole life insurance policyholder’s reserve, calculated evenly throughout the insurance period.
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Additionally, for products that reach 100% surrender value during the premium payment period, companies are required to apply a lapse rate assumption that is at least 30 percentage points higher than previously used.
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