Weak won fuels demand for dollar-denominated insurance, but FX risks persist

When a life insurance agent recommended a dollar-denominated annuity earlier this month as a way to benefit from strong U.S. currency, a Seoul office worker immediately signed up, attracted by the prospect of tax-free returns and potential foreign exchange gains. Soon after, however, the worker found himself scouring online forums, questioning whether undisclosed fees and future currency swings could erode the promised benefits. “Since the first premium has not yet been collected, I’d like to cancel the policy if there are major drawbacks that weren’t fully explained to me," he wrote on Blind, an anonymous community app. His concerns highlight the double-edged nature of dollar-denominated insurance products: A stronger greenback can enhance returns, but currency fluctuations can also magnify costs and reduce eventual payouts. Demand for U.S. dollar-denominated insurance products has jumped this year as the Korean won continues to trade at historically weak levels against the dollar. Under these policies, both premiums and payouts are made in dollars. They typically offer higher retu