Taiwan’s Financial Supervisory Commission (FSC) has reminded the public to exercise caution when purchasing investment-oriented insurance products, noting that policyholders assume the investment risks and that returns are not guaranteed.
The FSC’s reminder, cited by Taiwan News, focuses on products commonly known as investment-oriented or unit-linked insurance, in which part of policyholders’ premiums is allocated to investment funds or other financial instruments. The value of these policies depends on the performance of the underlying assets, so changes in market prices flow through to future benefits and account balances. For insurance professionals, the statement sets out the regulator’s expectations that customers understand that these contracts combine insurance coverage with exposure to financial markets, and that the insurance element does not remove the possibility of losses arising from asset performance.
The commission outlined three main considerations for consumers, beginning with clarity about the type of policy being purchased. Life insurance contracts are structured to pay a benefit to beneficiaries when the insured dies, supporting wealth transfer and survivor benefits. Annuity insurance, by contrast, provides a stream of payments to the policyholder during their lifetime and is commonly used as a retirement income tool.
According to the FSC, buyers should identify whether their primary objective is risk protection, income generation, or a combination of both, and then select the product type that corresponds to that objective. For intermediaries and product teams, the guidance points to the need for clear differentiation between life and annuity structures, particularly when investment-linked components are included. The regulator also noted that some policies feature regular payouts or dividends. In some cases, these amounts may be funded partly or entirely from the policyholder’s principal rather than from investment gains, which can reduce the remaining policy value over time. The FSC said consumers should review policy documents and disclaimers to understand how these payouts are calculated and from which sources they are drawn.
The second consideration identified by the FSC is that policyholders bear the investment risks embedded in these contracts. While investment-oriented policies may permit fund switching or adjustments to allocations, they leave policyholders exposed to equity, interest rate, credit, and liquidity risks associated with the chosen assets. Foreign currency-denominated contracts introduce additional exposures. Exchange rate movements can alter the local-currency value of benefits and account balances, while economic or political developments in the currency’s home jurisdiction can affect asset performance. The FSC encouraged consumers not to base purchase decisions solely on recent returns or prevailing market sentiment and to assess whether they can tolerate potential losses linked to both asset prices and currency fluctuations. The commission reiterated that consumers should only buy such products if they understand the investment strategy, the associated risks, and the possibility of negative returns.
As a third point, the FSC reminded policyholders that Taiwan’s rules provide for a limited period in which contracts can be cancelled without penalty if they are found to be unsuitable. Policyholders who conclude that a product does not meet their needs may cancel it within 10 days of receiving the policy. In these cases, the insurer must refund premiums in full. For insurers and distributors, this cooling-off period reinforces the need for detailed pre-sale disclosures, suitability checks, and documentation, particularly for investment-linked and foreign currency-denominated business, where product structures and risk profiles can be complex.
The FSC’s consumer communication comes against a backdrop of changing earnings and capital indicators in Taiwan’s insurance sector, which influence product design, asset-liability management, and hedging practices. At the end of December 2025, total pre-tax profit for insurance enterprises was NT$193.7 billion. Life insurers recorded NT$156.9 billion in pre-tax profit, down NT$158.6 billion, or 50.3%, from the previous year. Non-life insurers reported NT$36.8 billion in pre-tax profit, up NT$10.8 billion, or 41.5%, year on year. Owners’ equity across the industry stood at NT$2,884.8 billion. Life insurers accounted for NT$2,712.4 billion, an increase of NT$126.4 billion, or 4.9%, from a year earlier. Non-life insurers’ owners’ equity was NT$172.4 billion, up NT$21.3 billion, or 14.1%.
From the end of 2024 to the end of 2025, the New Taiwan dollar appreciated by 4.27% against the US dollar. Over the same period, the cumulative balance of foreign exchange valuation reserves at life insurers rose to NT$613.7 billion, an increase of NT$394.1 billion. The combined impact of exchange gains and losses, hedging outcomes, and volatility effects on the foreign exchange valuation reserve was NT$-821.2 billion. Life insurers’ overseas investments generated net gains of NT$518.5 billion when exchange and hedging results are included but the volatility effect on the reserve is excluded.
In product development, the FSC reported activity in spillover-effect and in-kind payment life insurance offerings, indicating continued shifts in product mix in Taiwan’s market. As of the fourth quarter of 2025 (Q4 2025), the commission had approved or accepted registrations for 305 spillover-effect insurance products from 15 life insurers. New contracts in this segment totalled 1,299,768, up 9% from 1,195,985 a year earlier. First-year premium income for these products was NT$44,652.07 million, up 61% from NT$27,748.63 million in the fourth quarter of 2024. For in-kind payment insurance, the FSC had approved or accepted 52 products from seven life insurers. New contracts reached 453,286, an increase of 74% from 261,115 in the fourth quarter of 2024. First-year premium income in this category was NT$872.38 million, down 50% from NT$1,736.7 million, signalling higher volumes alongside lower average premium levels or a different product composition.
Foreign currency-denominated life insurance business continued to expand through late 2025. By the end of November 2025, premium income from new foreign currency-denominated policies was approximately NT$376.638 billion, up 34% from NT$280.458 billion a year earlier. Investment-linked products accounted for NT$62.513 billion of this total, representing about 17% of new foreign currency premiums and rising 47% from NT$42.506 billion year on year. Traditional foreign currency life products generated NT$314.125 billion, or around 83% of the total, up 32% from NT$237.952 billion. For insurance professionals across Asia, the FSC’s latest communication links regulatory expectations on investment-oriented insurance with developments in currency markets, overseas investment outcomes, and product portfolio shifts, particularly in the expanding foreign currency and investment-linked segments.
