Taiwanese life insurance policy transfers take effect
August 30, 2014, 12:00 am TWN
TAIPEI -- Transfers of non-investment life insurance policies sold in Taiwan became effective Friday in a bid to meet a wide range of different fund needs of insurance policyholders, according the Financial Supervisory Commission (FSC,金融監督管理委員會).
The FSC, Taiwan's top financial regulator, said that non-investment life insurance policyholders in Taiwan are allowed to transfer their policies into other categories, such as health insurance, long-term care insurance and annuity insurance.
Market analysts said the changes result from years of intensified advocacy by the Life Insurance Association of the Republic of China (中華民國人壽保險商業同業公會), which urged the FSC to allow the transfers.
In life insurance contracts, insurance companies will pay the beneficiaries of the policyholders only after the insured person has died.
But life insurers have repeatedly said that the transfers are expected to allow the insured to get compensation while they are still alive. For example, once life insurance policyholders transfer their contracts to health insurance policies, the insured will be paid by the insurance company when they are hit by disease or injury.
Life insurers said the changes could allow the insured, instead of their beneficiaries, to pocket the returns provided by their insurance policies. In an aging society like Taiwan, such transfers are expected to financially benefit more and more elderly insurance policyholders.
The FSC said life insurance companies should give their customers a comprehensive assessment before the policyholders make up their minds on the changes and noted that discussions with their clients on the transfers should be tape recorded as evidence.
The commission said the insured will be allowed to transfer back to their original life insurance policies in three years after the transfers unless they take a payout during the three-year period.
Life insurance companies will not be allowed to solicit the insured to make any policy transfers through inappropriate marketing campaigns, the FSC said. Offenders will face a fine ranging between NT$600,000 (US$20,000) and NT$3 million, the FSC said, adding that any transfers should be based on the insured's needs.
Analysts said it is estimated that at least 4 million life insurance policies — worth more than NT$1 trillion in the local market — are eligible for the changes.