**Government and Insurance Industry Announce ‘Three-Step Package to Overcome Low Birthrate’ Support**
From April next year, couples who are on parental leave or within a year of childbirth will be able to receive discounts on children’s insurance premiums. Additionally, they will be able to defer the payment of insurance premiums for up to one year without interest.
On the 16th, Lee Eog-weon, Chairman of the Financial Services Commission, and CEOs of 20 domestic insurance companies held a meeting to announce the insurance industry’s ‘Three-Step Package to Overcome Low Birthrate’ to alleviate the insurance premium burden on families experiencing reduced income due to childcare. The support includes ➊ discounts on children’s insurance premiums, ➋ deferral of premium payments, and ➌ deferral of insurance contract loan repayments. The eligible recipients are those where the insurance policyholder or their spouse has given birth within the past year or is currently on parental leave.
The discount on children’s insurance premiums will last at least one year, with the discount rate set autonomously by the insurance companies. This applies to all children’s insurance policies in Korea, with annual premiums totaling 9.4 trillion won. Policyholders on parental leave can receive unlimited discounts on premiums for all their children. However, if the insured is born, the discount does not apply. For example, upon the birth of a second child, a discount on the first child’s insurance is possible, but not for the newly born second child. Currently, Hyundai Marine & Fire Insurance holds over 60% of the children’s insurance market.
The deferral of premium payments applies to all term insurance of the policyholder or their spouse, with annual premiums around 42.7 trillion won. The deferral period can be up to one year, with the policyholder choosing between 6 months or a year, without incurring additional interest. However, contracts where deferred amounts exceed the surrender value are excluded from deferment, as this could lead to a ‘runaway’ risk for the policyholder. Also, children’s insurance and life insurance policies linked to interest rates or variable insurance scheduled for discounts are excluded from premium payment deferral.
The loan repayment deferral applies to all insurance contract loans of the policyholder or their spouse, with the period selectable up to one year, without additional interest. The current outstanding balance of insurance contract loans is 70.5 trillion won.
All three plans can be applied once per insurance contract, but overlapping support is possible for each plan. This means one insurance contract can have both premium discounts and loan repayment deferrals. The benefits apply regardless of when the insurance was initiated and are sustainable rather than a one-time offer.
Following the necessary IT developments by each insurance company, all insurers will implement these measures simultaneously in April next year, with insurers planning to add standard special contracts.
A Financial Services Commission official stated, “This measure is the third public support product perceived by the people, following the praised death benefit securitization by President Lee Jae-myung and the insurance industry and local government cooperation product.”