Borrowers turn to insurance loans as mortgage lending tightens

A dental lab assistant surnamed Choi in Seongnam, Gyeonggi Province, has turned to insurance policy loans several times whenever she needed a little extra cash to cover unexpected expenses.

“Taking out a regular loan affects my credit score directly.

But with an insurance policy loan, I’m borrowing against premiums I’ve already paid, so it doesn’t drag down my credit rating,” she said.

“The interest rate is also lower than what you would get from other nonbank lenders.

So when I need a small amount of money quickly, this feels like the most reasonable option I have.” Choi said she stayed away from borrowing money to invest in stocks during this year’s record-breaking market rally.

But she has definitely seen people around her use insurance policy loans to bet on the stock market.

Similar conversations have surfaced on Blind, a popular anonymous workplace community app in Korea.

“I got the money quickly from an existing insurance policy, and my interest rate is only 3.6 percent.

I’ll make some gains and pay it back soon,” read one post shared in the app’s stock inv ...