This year, insurance contract loans from major insurers and card loans from card companies have increased primarily among those in their 50s and older. While balances for those in their 20s to 40s decreased, the opposite trend was observed among those in their 50s and 60s or older. Analysis suggests that demand for living expenses among middle-aged and elderly individuals with reduced income after retirement, combined with some demand for investment funds amid rising stock markets and public offering subscriptions, may have contributed.
According to data received by Rep. Lee Jong-wook of the People Power Party from the Financial Supervisory Service as of the end of July, the balance of insurance contract loans from major life insurers (Samsung, Hanwha, Kyobo) and non-life insurers (Samsung, Hyundai, DB, KB, Meritz) was 47.9119 trillion Korean won, an increase of 1.7933 trillion Korean won (3.9%) from the end of last year. The life insurers’ balance led the overall increase, rising by 1.7523 trillion Korean won (5.6%) to 33.2042 trillion Korean won.
By age group, the balance for those in their 60s or older increased by 1.2169 trillion Korean won (10.2%) to 13.1546 trillion Korean won over seven months. Those in their 50s also saw an increase of 852 billion Korean won (4.5%) to 19.6701 trillion Korean won. In contrast, balances for those in their 20s decreased by 4.6%, those in their 30s by 4.7%, and those in their 40s by 1.3%.
Insurance contract loans are products where money is borrowed using the surrender value of an insurance policy as collateral. Older individuals who have maintained insurance policies for a long time often have a larger surrender value, leading to higher loan amounts. The fact that funds can be withdrawn without additional collateral within the insurance contract is also cited as a reason for increased use by retirees with reduced income. The increase in loans, particularly from life insurers with larger surrender values, is related to this structure.
A similar trend was observed in card loans. As of the end of July, the balance of card loans from eight specialized card companies was 39.5207 trillion Korean won, an increase of 418.3 billion Korean won (1.1%) from the end of last year. Those in their 60s or older saw an increase of 700.5 billion Korean won (6.9%) to 10.899 trillion Korean won, and those in their 50s increased by 285.3 billion Korean won (2.1%) to 13.7827 trillion Korean won. Balances for those in their 20s to 40s decreased by around 3–4%.
A source from the financial authorities stated, “Insurance contract loans are typically repaid in early January, but this year they have been increasing since the beginning of the year,” adding, “The increase in loans coinciding with the bullish stock market and public offering subscription periods suggests a possibility of debt-driven investment.”
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