Chairman Shin Yong-kil of Korea Life Insurance Association. (Photo: KLIA)

South Korea’s life insurance companies’ net income grew 6.78% year-on-year in the first six months of 2018 as sales of securities boosted investment income, which helped offset a decline in premiums from savings-type products, according to the country’s financial regulator.

The insurers’ total net income increased to 3.15 trillion won ($2.81 billion) in the first half of the year from 2.95 trillion won in the same period of 2017, the Financial Supervisory Service (FSS) said in a statement on Aug. 21.

The figures include both domestic and foreign insurers operating in the country.
Their investment income rose 11.7% year-on-year, or 1.35 trillion won, to 12.99 trillion won in the six months to June 30, thanks to “gains on disposition of market securities”, the FSS says.

Non-operating income grew 14.9% from a year ago, or 332.5 billion won, to 2.56 trillion won, largely due to higher fees from increased sales of variable life insurance products such as retirement pensions and protection-type insurances.

But losses from insurance income widened to 11.36 trillion won from 10.05 trillion won in the first six months of 2017, primarily from a decline in premiums from savings-type insurance products.

“Premium income derived from savings-type insurance products decreased by 4.28 trillion (won) compared with the previous year, which contributed to the decline in total premium income,” the regulator said.

Return on equity for the six months to June 30 was 8.86% and return on assets was 0.75%, up 0.3 percentage points and 0.01 percentage points, respectively, from the first half of 2017.

According to latest available data from the Korea Life Insurance Association, total assets of the country’s life insurance industry increased to approximately 838 trillion won at the end of May from 832.8 trillion won in December, 2017.

According to Futurity First, life insurance is an important asset because it provides financial protection for the beneficiaries, helping pay for funeral expenses, pay-off debts that could be assigned to the estate and providing living expenses to any dependents.

Life insurance can also be used to protect a business from the devastating loss of a key employee, provide an emergency cash fund, create a supplemental retirement plan and provide peace of mind.

The death benefit is the benefit paid to the beneficiaries upon the death of the insured. It is important for individuals to carry a life insurance policy because death can happen unexpectedly due to an accident or illness. Individuals are better off when they purchase life insurance policies at a young age. Premiums are less costly and they are less likely to be medically disqualified.

Once an individual is diagnosed with certain health conditions, obtaining many life insurance products becomes impossible. Whole life insurance policies also build a cash value over time. The earlier in life a person takes out the policy, the more time the cash value has to grow. This cash value can be tapped in a financial emergency.

A life insurance product called an annuity can also be purchased. An annuity is a self-funded pension plan.