(1) Reasons for Proposal

The Amendment aims to improve the product structure so as to prevent the possibility of mis-selling by eliminating the structural issue of no or low cash surrender value insurance products, which have recently seen a surge in sales, being sold with an emphasis on high reimbursement rates relative to deposit insurance, and to operate lump-sum payment deposit insurance with regulatory profit and equity issues depending on the type of insurance premium payment, even though it is the same savings insurance with regulatory arbitrage and equity issue depending on the type of premium payment, even though it is the same deposit insurance in the same manner as the non-lump sum (installed payment of premiums) payment deposit insurance, thereby improving the system by means such as enhancing reimbursement rates. 

(2) Major Provisions

A. Improvement of the billing method for contract conclusion costs of lump-sum payment deposit insurance (Article 7-51 subparagraph 1)

Make an improvement by mandating the equal deduction of the contract conclusion costs for lump-sum payment deposit insurance from the reserve for at least 15 months to match the rate for non-lump-sum payment (installed payment of premiums) deposit insurance. 

B. Clarification of the definition of the no or low cash surrender value insurance and improvement of the product structure (Article 7-66 (4))

Clearly prescribe the definition of no or low cash surrender value insurance as the insurance that employs the rescission rate when calculating insurance premiums or claims (amount of pension); exclude the variable insurance that is not reasonable to be designed as a no or low cash surrender value insurance due to the nature of the product; and restrict the design of the reimbursement rate for standard insurance to be within 100% for low cash surrender value insurance and low cash surrender value insurance with a reimbursement rate not exceeding 50% relative to standard insurance.