South Korea faces deepening challenges from a rapidly aging population and growing elderly poverty. Nearly four in ten citizens over 65 live below the poverty line, the highest rate among advanced economies. To address this urgent issue, regulators plan a major reform in how life insurance operates.
The Financial Services Commission announced that policyholders will soon gain access to their life insurance payouts before death. Starting at age 55, they can convert benefits traditionally reserved for heirs into retirement income. This change marks a turning point in South Korea life insurance reform, offering a new tool to fight elderly poverty.
Officials lowered the eligibility age from 65 to 55 to bridge the income gap for early retirees. South Korea’s average retirement age is 53, leaving many without steady income for over a decade. With this new system, families can access funds sooner and plan more effectively for long-term financial stability.
The policy covers nearly 760,000 contracts with an estimated value of 35 trillion won. Eligible policies must meet conditions, including payment periods of at least 10 years and benefits under 900 million won. Policyholders can withdraw up to 90 percent of their benefit, above the premiums they contributed. Withdrawals may come as yearly lump sums or monthly installments.
For example, a 55-year-old with a policy worth 100 million won could cash out 70 percent while leaving a portion for heirs. Monthly payments would exceed the premiums initially paid, giving retirees extra income in later years. This illustrates how South Korea life insurance reform aims to support aging households more effectively.
The government and insurers also plan to launch service-based products linked to elderly care. These will cover nursing home admissions, caregiver services, and health vouchers. By expanding beyond financial payouts, insurers hope to capture demand from the fast-growing senior care market.
Life insurers are positioning themselves aggressively. KB Life operates senior housing, nursing homes, and care centers through its KB Golden Lifecare brand. Shinhan Life plans to open a care facility next year, while Samsung Life will establish a new subsidiary. Other companies, including Hana Life, KDB Life, and Kyobo Life, have created dedicated units for senior care.
Industry officials believe the reform will expand customer options and stimulate business opportunities. By liquidating death benefits, insurers can attract retirees while reducing reliance on traditional policies. More importantly, the South Korea life insurance reform provides seniors with dignity and stability in their later years.
