Korea’s life insurance purchase rate has increased for the first time in three years due to an increase in guarantee-type insurance sales.
On Nov. 28, the Korea Life Insurance Association (KLIA) announced the results of the 17th Life Insurance Usage Survey. The survey was conducted on 2,000 households nationwide from June 22 to Aug. 2.
According to the survey results, the overall household life insurance purchase rate stood at 84 percent this year.
This is an increase of 3 percentage points from 2021, while the household private life insurance purchase rate climbed by 2.2 percentage points to 80.4 percent.
This rebound in the household life insurance purchase rate, which slid in 2021 due to the impacts of COVID-19 and an economic downturn, is a result of the expansion of guarantee type insurance sales, according to the KLIA.
Sickness insurance took the lion’s share in private life insurance policies recently purchased, with a 42.4 percent share.
It was followed by medical indemnity insurance (20.6 percent) and accident and disaster insurance (15.2 percent).
Compared to the same period, the share of long-term nursing insurance decreased by 2.3 percentage points.
In addition, 76.3 percent of those surveyed purchased private life insurance to cover their own medical expenses in the event of an accident or illness.
Other reasons included protecting the family’s livelihood in case of an emergency (67.7 percent) and covering temporary loss of income in case of a disaster or accident (30.3 percent).
When analyzing purchase routes of all life insurance policies, 96.1 percent purchased insurance policies through face-to-face channels, such as insurance agents.
When asked how they would like to purchase life insurance in the future, household heads in their 20s, 30s and 40s said that they will prefer to buy insurance policies through non-face-to-face channels such as Internet and home shopping channels.
One in four households are currently feeling uneasy about their lives. By household head age, households headed by those in their 40s and older were more likely to be anxious about their retirement funds.
Among those who have life insurance, 52.1 percent of households believe that their current coverage is inadequate.
Meanwhile, 26.7 percent of households without life insurance say they feel the need to purchase life insurance.
Among those who believe that their current coverage is insufficient and those who are willing to purchase life insurance, products they would prioritize in the future are — sickness insurance (21.5 percent), accident and disaster insurance (20.7 percent), and long-term nursing insurance (19.2 percent).
KLIA to Enhance Cooperation with AAJI, Including Information Exchanges
The Korea Life Insurance Association inked a memorandum of understanding with the Indonesian Life Insurance Association, or Asosiasi Asuransi Jiwa Indonesia (AAJI), to enhance cooperation, at the Life Insurance Association in Chungmu-ro of Seoul) on Dec. 10.
The deal includes mutual information exchanges.
The Korean life insurance industry is in urgent need of finding new growth drivers, as growth is slowing down due to industry-wide saturation, intensifying competition among life insurers and the weakening of the potential demand base due to a rapid change in demographics, such as the country’s low birthrate and an aging population.
Through the MOU, the two associations agreed to cooperate in various fields, including regular exchanges of life insurance statistics, joint education and training programs, and cooperation in production of educational materials for the Indonesian people.
In particular, detailed statistics on the Indonesian life insurance market are expected to provide practical help to Korean life insurers considering tapping the Indonesian market.
“Indonesia is one of the most dynamic markets with huge growth potential in Southeast Asia. I am pleased to sign a business agreement with AAJI actively engaged in exchanges with Korea,” said Kim Chul-ju, chairman of the KLIA.
“Through this agreement, we will provide practical support for our members’ entry into and investment in Indonesia through information and personnel exchanges and conferences between the life insurance industries of the two countries.”
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