If I suddenly pass away, what will happen to my family? Those raising young children or paying off a mortgage may understandably worry about the risk of death. However, increasing monthly insurance premiums can be a significant financial burden. In such cases, 'term insurance' is worth considering.
Unlike whole life insurance, which provides coverage for the insured's entire life, term insurance pays out a death benefit only for a specified period. It can be designed to cover a set number of years, such as five or seven, or until a certain age, like 60 or 70. Because the coverage period is shorter, premiums are generally lower than those for whole life insurance, making it particularly useful during times of high expenses, such as raising children or repaying a mortgage.
According to the Korea Life Insurance Association's product comparison, a 40-year-old male can secure a death benefit of 100 million won for a monthly premium in the range of 10,000 won. Shinhan Life's 'Shinhan SOL Term Insurance' costs 14,400 won per month, while Kyobo Life Planet's 'Kyobo Raffle Term Insurance (non-refund type, standard health)' is priced at 15,080 won. Hanwha Life's 'e-Term Insurance (pure coverage type)' and Samsung Life's 'Internet Term Insurance (pure coverage type)' both cost 16,000 won. However, coverage periods and enrollment conditions vary by product, so it's essential to check before signing up.
Sales of term insurance are on the rise. According to the financial sector, as of the end of July this year, the initial premium for term insurance reached 150.7 billion won, an 18.2% increase compared to the same period last year. The number of policies sold also rose by 13% to 1,341,049. In contrast, initial premiums for whole life insurance fell by 6.3% to 3.8499 trillion won, with sales decreasing by 5.8%.
However, term insurance is not always the better option. Setting the term to a later age, such as 80, can significantly increase premiums, and re-enrollment after the term may be challenging depending on age and health status. Pure coverage types often do not offer a maturity refund, and many have low or no surrender values.
Therefore, if lifelong death coverage is necessary, whole life insurance may be the better choice, as it pays out regardless of when death occurs. Some products also allow for surrender values or policy loans when cash is needed. However, it is important to note that premiums are relatively high, and early termination may result in receiving less than the total premiums paid.
Ultimately, the key considerations are the duration of needed coverage and the ability to pay premiums. Term insurance can be tailored to align with milestones such as children's independence or loan repayment, while whole life insurance requires evaluating whether one can manage long-term premium payments.
* This article has been translated by AI.
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