This year, the increase in insurance policy loans has been concentrated among individuals in their 50s and 60s. This trend is attributed to a growing demand for living expenses around retirement age, coupled with increased investment needs fueled by a booming stock market in the first half of the year.
According to data submitted by Lee Jong-wook, a lawmaker from the People Power Party, to the Financial Supervisory Service, the total balance of insurance policy loans from major life insurance companies (Samsung, Hanwha, Kyobo) and non-life insurance companies (Samsung, Hyundai, DB, KB, Meritz) reached 47.9119 trillion won by the end of July, an increase of 1.7933 trillion won (3.9%) compared to the end of last year.
Specifically, the balance of life insurance policy loans rose to 33.2042 trillion won, marking a 5.6% (1.7523 trillion won) increase, leading the overall growth. The balance for non-life insurance companies remained around 14 trillion won.
By age group, the most significant increase was observed among those aged 60 and older. Their loan balance grew from 11.9377 trillion won at the end of last year to 13.1546 trillion won by the end of July, a rise of 10.2% (1.2169 trillion won). The balance for those in their 50s also increased by 4.5% (8520 billion won) to 19.6701 trillion won. In contrast, the balances for individuals in their 20s, 30s, and 40s decreased by 4.6%, 4.7%, and 1.3%, respectively.
Insurance policy loans are a typical form of 'recession-type loans' that allow individuals to borrow against their surrender values without the need for income verification or credit checks. This makes them a popular option for policyholders in need of quick funds.
Typically, insurance policy loans see a decrease in balance at the beginning of the year due to increased repayments, but this year has seen a continuous rise since the start of the year. Financial experts attribute this to heightened investment demand resulting from the stock market's strong performance, with the KOSPI index surpassing the 9,000 mark at its peak during the first half of the year.
Notably, individuals in their 50s and 60s, who have paid premiums for a longer duration, are likely to have larger loan amounts available, contributing to the increase in insurance policy loans. Additionally, the demand for living expenses due to reduced income after retirement has also influenced the rise in loans among those aged 60 and older.
Seo Ji-yong, a professor at Sangmyung University, stated, "Individuals in their 50s and 60s may have increasingly relied on insurance policy loans due to income gaps and urgent financial needs for living and medical expenses after retirement. It is crucial to provide support measures such as repayment counseling, as vulnerable borrowers may face issues like unpaid premiums or policy cancellations."
* This article has been translated by AI.
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