Multiple Insurance Policies Extend Waiting Periods, Harming Policyholders? FSC: Immediate Comprehensive Review Ordered

Multiple commercially available U.S. dollar-denominated variable life insurance and cancer insurance policies delay the payout of benefits for specific illnesses, severe cancer, and early payment options until the second policy year, violating Taiwan's regulations requiring benefits to be payable after the waiting period. This practice harms policyholder rights, and Chen Ching-Yuan, Deputy Director of the Insurance Bureau at the Financial Supervisory Commission (FSC), announced today (9th) that an immediate comprehensive review will be conducted, with results to be disclosed at a press conference.

The FSC held its regular press briefing today. It was revealed that several insurance policies extend the waiting period for claiming illness-related benefits—from the legally mandated maximum of 30 or 90 days—to "starting from the second policy year." This not only violates regulations but also leaves policyholders exposed to a coverage gap from day 31 or 91 to day 365, sparking public outcry. Chen stated that, based on preliminary findings, the non-compliant policies are all under the filing-based approval system, and "we are already handling the matter."

Chen emphasized that Taiwan's "Guidelines for the Review of Life Insurance Products" Article 67 and Article 78 stipulate that the waiting period for cancer and major illness benefits must not exceed 90 days, and 30 days for other illnesses. The waiting period refers to the time during which insurers are not liable for claims. In other words, after 30 or 90 days from the policy start date, insurers must assume liability and allow claims—benefits should not be deferred until the second policy year.

Preliminary findings indicate that Cathay Life has five non-compliant policies and Nan Shan Life has one. Cathay Life’s policies include three U.S. dollar variable life insurance plans—First Prosperity Family, Golden Health & Peace, and U.S. Love Health盈—and two cancer insurance plans—Good Health Love and True Love Code. Nan Shan Life’s policy is the U.S. Dollar Variable Life Insurance plan named Perfect Love.

These policies delay the payout timing for benefits related to first diagnosis of specific illnesses or severe cancer, as well as early payout options (offsettable against death or total disability benefits), all set to take effect only from the second policy year.

Regarding the six policies, Chen noted that Cathay Life’s True Love Code cancer insurance offers either cancer genetic testing services or a cancer genetic testing benefit. "Testing services are not disease occurrences, so they are less relevant to waiting period rules." However, for the other five policies, "we will request explanations from the companies. If violations are confirmed, we will impose administrative penalties and investigate whether any personnel were negligent."

Given the broad impact on policyholders, Chen stated that the FSC has asked the Life Insurance Association to survey all life insurers to identify how many policies extend waiting periods beyond legal limits. Simultaneously, the FSC will cross-check data via the Insurance Development Center’s product database to reduce concerns about conflicts of interest from self-reporting.

When asked how existing policyholders should proceed, Chen clarified: "Administrative actions will be taken against violations according to law. However, insurance contracts are civil agreements, so rights and obligations revert to the contract terms."

Media also questioned whether the FSC would require non-compliant insurers to proactively notify policyholders, given that many consumers are unaware of their rights. Chen responded that current regulations require full disclosure during sales. "We must clarify whether insurers properly informed policyholders about waiting period rules. Additionally, we need to examine whether product design risks and premium rates adequately reflect these terms."