To reduce the financial strain on retirees, the South Korean government is considering allowing insurance policyholders to tap death benefits while still alive, turning payouts once reserved for heirs into retirement income, reported the Korea Herald.
The Financial Services Commission plans to launch this initiative in October 2025 and has formed a taskforce to review this plan of letting policyholders access their benefits from age 55. The taskforce consists of five life insurers - Hanwha, Samsung, Kyobo, Shinhan and KB.
South Korea became a super-aged society 2024, with more than 10m citizens over the age of 65 and this share is projected to double by 2050. The new initiative is likely to benefit 759,000 insurance policies holders with a combined KW35.4tr ($25.3bn) in benefits to be made accessible during a policyholder’s lifetime. Policyholders will be able to withdraw amounts in excess of the premiums they paid, capped at 90% of the benefit. They can opt for either a yearly lump sum or monthly instalments. The lump-sum option starts in October, while monthly payments will begin early next year after system upgrades.