Heungkuk Life has decided to raise the limit on insurance policy loans from 80% to 90%. This adjustment comes as the company has seen increased demand for quick cash from policyholders, following a period of managing household loans in the first half of the year.
According to the financial sector on the 27th, Heungkuk Life will increase the maximum limit for insurance policy loan applications from the previous 80% to 90%. Insurance policy loans allow policyholders to borrow funds against the surrender value of their insurance policies without a separate credit check, making them a viable option for urgent financial needs such as living expenses and medical bills.
Heungkuk Life exceeded its household loan management targets in the first half of the year, prompting financial authorities to require stricter loan management. As a result, the company found itself with more leeway in its total loan amounts and decided to raise the limits in response to ongoing demand. This change will enable policyholders in need of quick cash to borrow larger amounts.
Demand for insurance policy loans remains high compared to the beginning of the year. According to the Korea Life Insurance Association, the outstanding balance of insurance policy loans from the top five life insurers—Samsung Life, Kyobo Life, Hanwha Life, Shinhan Life, and NH Nonghyup Life—was 42.3171 trillion won at the end of August, a slight decrease of 0.13% from the previous month. However, this figure represents an increase of approximately 5.8% compared to early January when it was around 40 trillion won. Since January, the outstanding balance has increased each month, except for April and August.
As banks tighten their household loan criteria, the demand for insurance policy loans continues, raising questions about whether other insurers will adjust their limits. However, with financial authorities maintaining a focus on managing household debt, it remains uncertain whether Heungkuk Life's actions will lead to broader changes across the industry.
In the first half of the year, other insurers such as Kyobo Life, Hanwha Life, Dongyang Life, and Samsung Fire, which were also instructed by financial authorities to manage household loans, have maintained reduced limits. These companies have lowered their insurance policy loan limits from the previous 90-95% range to 80-85%. Even if there is demand for loans, the decision to expand limits may vary depending on each company's total capacity.
A financial sector official stated, “Insurers that exceeded their household loan management targets in the first half are likely to maintain limits in the 80% range until the end of the year. Insurers with more leeway in their total loan amounts may respond by increasing their limits.”
* This article has been translated by AI.
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