Managing Retirement Income with Life Insurance... "Like an Annuity You Can Access Anytime"

Receive payments in installments like an annuity, with flexibility to adjust when they begin
Competition intensifies to secure long-term cash flow and liquidity
Authorities also encourage policyholders to use death benefits while alive
Experts: "Clearly explain benefit amounts, guarantee periods and other details for comparison"

Life insurers are rolling out annuity products that let retirees receive their retirement savings in installments over an extended period while still allowing them to withdraw some of the money when needed. Rather than simply providing a stable stream of retirement income, the products help customers manage cash flow after retirement by offering flexibility in when they begin receiving annuity payments and how they withdraw the funds. The trend has also been bolstered by the financial authorities’ introduction of a system that allows policyholders to use death benefits for retirement expenses while they are still alive.

According to the life insurance industry on October 28, major life insurers are shifting the way they offer products and services beyond simply helping customers accumulate funds, toward enabling them to access their money reliably and flexibly after retirement.

This shift is intertwined with regulatory risks facing insurers’ traditional flagship products. In the past, life insurers competed on surrender value by marketing short-payment whole life insurance policies—which offer tax benefits if maintained for at least 10 years—as if they were savings products for building a lump sum. However, after the financial authorities curbed competition over surrender values based on overly optimistic lapse-rate assumptions, life insurers turned their attention to diversifying and improving products that provide retirement income.

Customers’ retirement savings habits have also driven product diversification. Retirement funds need to be drawn down over 30 years or more after retirement, but people still tend to withdraw them as a lump sum. According to the Ministry of Employment and Labor and the life insurance industry, 83.5% of the 601,000 people who began receiving retirement pensions in 2025 withdrew their accumulated funds as a lump sum. Just 2.3% of pension recipients chose a payout period of more than 20 years.

In response, life insurers are introducing products that guarantee long-term installment payments to help prevent retirement savings from running out too soon. One example is the “IRP Guaranteed Participating Insurance,” the industry’s first product designed exclusively for individual retirement pension (IRP) accounts, launched by Mirae Asset Life Insurance. Customers can place their IRP savings in the product from age 50, and it guarantees that the principal will be paid out in equal amounts over 20 years, starting after age 55. Payments continue for 20 years even if investment losses occur, while the accumulated funds are diversified through MVP Funds. Assuming an annual investment return of 3.75%, the structure allows annuity payments to continue from age 65 through age 100.

Life insurers are also offering products with greater liquidity to ease customers’ concerns that their money will be locked into an annuity and unavailable in an emergency. The “Samsung Roll-and-Receive Annuity Insurance,” offered by Samsung Life Insurance, applies a fixed interest rate for the first 10 years after enrollment and a declared interest rate thereafter. If customers need a lump sum before maturity, they can take out a policy loan of up to 95% of the surrender value without surrendering the policy or undergoing a separate review, or make a partial withdrawal from the accumulated funds, improving access to their money. However, during periods of falling interest rates, the benefit payments or growth in accumulated funds under the declared rate may fall short of expectations, so customers should exercise caution.

The option to pause annuity payments and resume them later has also been introduced. KB Life’s “KB 100-Year Secure Annuity Insurance” includes a “Stop&Go (Stop & Go)” feature that lets customers suspend annuity payments for a set period to increase their accumulated funds before resuming payments. When a large sum is needed for expenses such as medical care or housing, customers can withdraw part of the funds set aside for their annuity through the “Emergency Retirement Funds” feature.

The financial authorities’ initiative to introduce a “death benefit liquidity” system is also supporting the life insurance industry’s efforts to make retirement funds more flexible. Under the system, whole life insurance policyholders gradually reduce their death coverage and receive the reduced surrender value in installments while they are still alive. Early in 2026, the Financial Services Commission expanded the service to 19 life insurers, up from five. People aged 55 or older can apply. The system is intended to bridge the so-called “income crevasse”—the period without income between retirement and the start of National Pension benefits.

Experts emphasized that while life insurers should diversify their products to help fill retirement income gaps, they should also put consumer safeguards in place to match the increasingly complex product structures.

“Diversifying products that can be tailored to each policyholder’s circumstances, such as more sophisticated annuity structures and the death benefit liquidity system, is a major advantage that responds to changes in demographics and consumer demand,” said Lee Ju-yeol, a professor in the Department of Health Administration at Namseoul University. “Insurers should clearly explain not only the projected benefit payments for each product, but also when payments begin, the guarantee period and the penalties for early surrender, so customers can easily compare them with competing products.”

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