Starting soon, the management system for insurance policy loans will be improved to allow consumers to cancel each loan transaction individually when multiple loans are taken out against the same policy.
The Financial Supervisory Service (FSS) announced today (June 30) that it will change how insurance companies manage policy loan information starting July 1, enabling the exercise of the right to cancel subscriptions for each individual loan transaction.
Financial consumers are guaranteed the right to cancel a subscription, which allows them to re-evaluate the necessity and terms of a contract within a certain period after signing up for a financial product and cancel it without any disadvantages.
Accordingly, this right to cancel also applies to loan products, including insurance policy loans.
Under the law, the period during which a loan product can be cancelled is 14 days from the date the contract documents are provided, the date the contract is signed, or the date the loan is disbursed, whichever is later.
An insurance policy loan is a loan taken out using the premiums already paid by the policyholder as collateral.
A key feature is that multiple loans can be taken out based on a single insurance contract.
Until now, insurance companies managed these loans based on the insurance contract rather than individual loan transactions, making it more difficult to exercise the right to cancel compared to other loan products.
For example, if a policyholder took out an initial policy loan and then received additional loans under the same insurance contract, the cancellation period was often calculated based on the date of the first loan. This made it difficult to cancel subsequent additional loans if the 14-day window from the initial loan had already passed.
The FSS explained that starting July 1, it will resolve this issue by changing the management system for insurance policy loan information from the existing insurance contract-based unit to an individual loan transaction-based unit.
In addition, the FSS plans to ensure that insurance companies clearly inform customers when they take out a policy loan that the right to cancel is guaranteed for each individual loan transaction.
The FSS stated, "We will continue to improve unreasonable financial practices to strengthen the protection of financial consumers' rights and interests."
(Photo: Yonhap News)
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