The aggregate volume of unpaid benefits would be in the hundreds of million won or may be in the trillion won. (image:Kobizmedia)
SEOUL, Korea, April 22, 2014 (Korea Bizwire) – Amid a series of scandals involving insurance companies, another has burst out. This time it is life insurance companies most of which have not paid out benefits for suicide victims. Even though their insurance policies clearly promised they would pay even in the case of suicide, they refused to do so to the claimants. According to financial regulators, the aggregate volume of unpaid benefits would be in the hundreds of million won or may be in the trillion won.
The regulators would encourage amicable settlement between the insurers and policyholders as excessively favorable ruling to the policyholders would give them a perverse incentive to kill themselves to get money for their families.
Already life insurers such as Samsung Life are paying out compensation to those policyholders who raised objections. The Financial Supervisory Service is also playing the role of mediator and suggests the volume of compensation at the level of 60 to 70 percent of the original benefit amount. The Korea Finance Consumer Federation estimated the unpaid benefits related to suicide victims would be in excess of 2 trillion won.
A financial regulator said, “If the suicide insurance money is paid out, it will set a bad example for others which is socially unacceptable.” The regulators thus will allow life insurance companies to pay benefits for those already claimed for the cases while urging them to revise the policy provisions so that there would be no more payments for the families of suicide victims.
A life insurance company official said, “When we revise the policy in 2010 we clearly specified that there would be no death benefit for suicide. Many life insurance companies made a mistake of including suicide as part of damages in the early 2000s but everyone knows it’s not true.”
Written by Sean Chung (schung10@koreabizwire.com)
Policies & Law (Follow us @Policynews_Korea)
