Kyobo Life Insurance Co.’s says its life-time insurance offering, Kyobo Faithful Universal Variable Insurance, that is faithful to the core concept of what a life insurance policy ought to do.

The insurance product allows part of the premium to be invested in funds so that the premium and cash value can vary depending on earnings from the investment.

Kyobo Life officials said existing life-time insurance products have complicated structures that are hard to understand for the customers. Premiums are too expensive, they said, in contrast with the Kyobo Life life-time insurance product.

They said their product is simply focused on death insurance benefit with lower insurance premiums for policyholders.

Policyholders who need to pay for day-to-day expenses  will have much more benefits from the variable permanent life insurance policy. Those policyholders who maintained their policies for over 10 years will be paid a bonus of 3.5 percent of the accumulated cash value every five years, and they will accumulate more cash value depending on the earnings of investment funds.

This product is recognized as a reformative product by the Korea Life Insurance Association by winning the exclusive right to be used as guarantee expenses, which will either be increased or decreased depending on the results of the operation of the investment funds. The product also pays a special premium bonus to cover the losses from the investment funds, which also helped to win the exclusive right.

The life-time insurance product had of its shortcomings remedied, including free payments and withdrawals that could result in termination of the insurance policies in the middle of the contract periods.

The remedied matters included a guarantee for insurance policy benefits with accumulated cash value without additional payments. The guarantee amount will be reduced equal to the payment made with the accumulated cash value, but the death benefits will be continued to be maintained as long as the life-time insurance policy maintains its validity.

Chief Lee Chang-mu of the Variable Insurance Product Team, said the existing variable life-time insurance products had very complicated structures with expensive premiums, which were too burdensome for customers, but Kyobo Life’s variable life-time insurance product addresses those shortcomings so policyholders can continue to benefit from the variable life insurance policies with simple structures and inexpensive premiums.

Anyone 15 through 70 is entitled to subscribe to the premium insurance policies. 

Variable Life Insurance policies combine the benefits of a Permanent Life Insurance Policy with the benefits of a savings account, with which you can invest in stocks, bonds, money market accounts or mutual funds. A portion of your premium will be applied to this separate investment account. With this policy the value of accumulated cash account and the death benefit may increase faster, but it carries more risk as well. You will not be taxed on the profits of this investment until the policy is cashed out by you or your beneficiaries. If the investments in your account do not perform well, or lose value, death benefits may decrease. 

Many policies will set a minimum amount on the death benefits, but the investment portion of customers’ premiums will not typically guarantee a minimum return.