Korean Executive Term Insurance Tax Treatment Calculator

Review Korean 2026 executive term insurance earned expenses, capitalized and prepaid premiums, progressive corporate/local surrender tax and net cost. Separate director wage and retirement transfer assumptions, retain unverified results and save the review.

Korean corporate insurance tax · 2026 rules

A refund rate is not a deductible-premium ratio. Verify maturity, retirement, timing and tax asset/prepaid basis. Corporate surrender tax and the director’s transfer income are separate.

Official-source verification: 2026-10-07 · Amounts and cumulative premiums are capped at KRW 1 trillion; periods are 1–30 years and refund rates 0–500%.

1. Premiums and contract terms

A predictable retirement surrender may require capitalization even without a maturity benefit. Limited-pay premiums need not equal current earned expense. Enter the corporate base after other deductions but before this insurance’s expense and exit.

2. Refund schedule and annual tax inputs

Enter year-end values starting at policy year 1. Verified zero requires the confirmation box. Missing refunds are never interpolated. In reviewed-split mode, paid minus capitalized minus earned premiums accumulate as prepaid basis, which can be expensed after payments end when verified.

Annual premium, verified refund, tax asset and earned expense, and corporate tax base inputs
Policy yearPremiumVerified refundBase before insurance
Year 136,000,000 KRW
Year 236,000,000 KRW
Year 336,000,000 KRW
Year 436,000,000 KRW
Year 536,000,000 KRW

3. Exit and director transfer review

The paid-premium wage case in Division-3449 differs from actual-retirement valuation in Written-2022-Withholding-3587. Do not apply either automatically to every term policy. Retirement limits, valuation and corporate transfer treatment require review; corporate transfer tax and combined cost remain pending.

Tax review results · Year 5

Verification needed

  • Verify a corporate policyholder
  • Verify a corporate beneficiary
  • Verify the maturity benefit
  • Verify retirement and planned surrender terms
  • Verify business purpose
  • Verify earned expense and prepaid timing
  • Full-expense conditions unmet: use a reviewed split
  • Verify an ordinary corporation with a 12-month tax year

Cumulative premiums

180,000,000 KRW

Closing tax asset

Pending

Closing prepaid basis

Pending

Cumulative premium national saving

Pending

Cumulative premium local saving

Pending

Corporate surrender at selected year

Refund / refund rate
Pending / —
Surrender taxable-base change
Pending
Incremental surrender national / local tax
Pending / Pending
Surrender net cost including local tax
Pending

Net cost = paid − refund − cumulative premium tax savings + incremental surrender tax. A negative tax change is lower assessed tax, not an extra refund.

Annual allocation and alternative surrender points

Each row is an alternative surrender after maintaining through that year. Do not sum exit tax or net cost across rows. This remains a corporate-surrender comparison when transfer is selected.

Annual earned expense, tax asset and prepaid basis with separate corporate surrender scenarios
YearPaidEarned expenseTax assetPrepaidRefundRefund rateSurrender base changeSurrender nationalSurrender localSurrender net cost
Year 136,000,000 KRWPendingPendingPendingPending—PendingPendingPendingPending
Year 236,000,000 KRWPendingPendingPendingPending—PendingPendingPendingPending
Year 336,000,000 KRWPendingPendingPendingPending—PendingPendingPendingPending
Year 436,000,000 KRWPendingPendingPendingPending—PendingPendingPendingPending
★ Year 536,000,000 KRWPendingPendingPendingPending—PendingPendingPendingPending
  • All policy years use fixed Korean 2026 rules. Actual historical tax and future rates require separate verification.
  • Excludes credits, minimum tax, loss carryforwards, penalties, social insurance, retirement limits, death benefits, payment timing and opportunity cost. Tax is rounded down to won.

Next action

Take the illustration, premium ledger, refund table, retirement and remuneration rules, and this review to your tax adviser to confirm expense, basis and valuation.

Related calculators

Executive term insurance: review premiums and the exit together

Executive term insurance protects a corporation against risks arising from the death of its CEO or other key executives.
A claim that premiums are deductible does not explain how much is earned expense in the current year or the tax consequences of receiving a surrender refund later.
The absence of a maturity benefit is different from the existence of an early surrender value.

This calculator uses South Korea’s 2026 rules and a policy illustration, premium ledger and tax-reviewed allocations to separate earned expense, capitalized premiums and prepaid basis.
It distinguishes corporate surrender income and national/local tax, cash payments while maintaining the policy, and a director’s conditional transfer-income estimate.
Use the result to prepare an adviser review; it is not a product yield, insurance ranking or enrollment recommendation.

Documents to prepare before enrollment or closing the books

  • Policy and terms identifying the corporate holder and beneficiary and the insured executive
  • Premium ledger from inception, year-end surrender schedule and maturity-benefit details
  • Retirement and surrender provisions, plus verified earned expense and capitalized-premium amounts
  • Corporate taxable bases before this insurance, after other deductions; a verified personal base when considering a transfer

Earned expense, tax assets and prepaid premiums

Earned expense

Premiums recognized for protection during the relevant period are the earned-expense amount.
The payment year need not be the expense year.
Verify business purpose under Corporate Tax Act Article 19 and the timing principle under Article 40.

Tax asset

A premium portion attributable to a maturity refund or a relevant reserve may remain capitalized.
This is not an instruction to enter the entire maturity payment or surrender value as the annual capitalized premium.
Use the premium amount verified for the contract’s tax treatment.

Prepaid basis

Payments left after capitalization and earned expense remain prepaid.
Limited-pay policies can continue providing protection after payments stop.
Verified earned expense in later years can draw on the remaining prepaid balance.

An 80% surrender rate does not mean that 80% of each premium is capitalized or that only 20% is deductible.
A refund rate describes cash returned at one point relative to cumulative payments; tax allocation depends on the contract, retirement assumptions, premium reserves and protection periods.
Review tax basis and timing, rather than relying only on account names in financial statements.

Conditions before using the full earned-expense scenario

NTS Written-2021-Corporate-2029 cites Written-2018-Corporate-1779 for period-based expense and surrender-income treatment when retirement timing is not fixed and the retirement refund cannot be estimated in advance.
The same official material discusses the contrasting Legal-Corporate-2013-397 case in which retirement surrender is foreseeable and reserve-related premiums are capitalized.
No maturity benefit alone does not settle the treatment of every policy.

Contract conditions for a full earned-expense assumption or tax-reviewed split
Verified conditionCalculator treatment
Corporate holder and beneficiary; no maturity benefit or fixed retirement dateFull earned-expense scenario after business-purpose and timing review
Maturity benefit or anticipated retirement surrenderEnter tax-reviewed annual capitalized and earned premiums
Limited-pay premiums covering multiple protection periodsVerify prepaid basis and period recognition
Individual holder or beneficiary, or unverified key conditionsCorporate-policy tax results remain pending

A confirmation box records an input assumption; it is not NTS approval of a deduction.
Individual or family beneficiaries require a different wage, benefit or income-disposition review and do not fit the corporate-beneficiary calculation.
Reconcile financial-statement balances with tax adjustments before using the closing basis to interpret surrender income.

Korean corporate and local income tax in 2026

The calculator assumes an ordinary domestic corporation with a full 12-month tax year and separately applies Corporate Tax Act Article 55 and standard Local Tax Act Article 103-20 rates.
It compares progressive assessed tax before and after insurance instead of multiplying all premiums by one marginal rate, so movements across brackets are included.
Corporations covered by Article 60-2(1)(1) and short tax years are outside this model.

2026 ordinary Korean corporate national and standard local income tax brackets
Taxable-base bracketNationalLocal
Up to KRW 200 million10%1%
Over KRW 200 million to KRW 20 billion20%2%
Over KRW 20 billion to KRW 300 billion22%2.2%
Over KRW 300 billion25%2.5%

A taxable base differs from accounting profit or revenue.
Enter the verified base after other deductions but before this insurance’s expense and exit.
A year without a taxable base may have zero current tax savings; the model does not carry that loss into later years.
Every policy year uses fixed 2026 rules, so the result is not a filing calculation of actual historical tax or confirmed future law.

Premium allocation and surrender-tax formulas

Annual allocation

Closing prepaid = opening prepaid + paid premium − capitalized premium − earned expense

Capitalized premiums cannot exceed that year’s payments.
Earned expense cannot exceed opening prepaid plus the current uncapitalized premium.
Monthly premiums are multiplied by 12, and new payments become zero after the payment period.

The surrender year

Surrender taxable-base change = refund − closing tax asset − extinguished prepaid basis

When all premiums were earned expense and no tax basis remains, the whole refund increases the base.
With a capitalized reserve, use the difference between refund and basis.
The model assumes that extinguishing the verified prepaid amount is recognized on surrender; exceptions and actual timing require contract-specific review.

Tax effects and net cost

Surrender net cost = cumulative paid − refund − cumulative premium tax savings + incremental surrender tax

Incremental surrender tax compares the current year’s tax after premium expense with the tax after adding the exit change.
If premium expense makes the current balance negative, add surrender income to that negative balance before applying the zero floor.
Clipping the balance to zero too early would overstate tax on the refund.
National and local amounts are shown separately and both enter net cost.

Step-by-step use

  1. Choose the period from inception.
    Enter monthly or annual premiums, payment years and projection years.
    Opening tax asset and prepaid basis are zero, so an existing contract also needs the reviewed years from its inception.
  2. Verify conditions and timing.
    Select the holder, beneficiary, maturity benefit and retirement terms, then confirm business purpose and earned-period allocation.
    For a limited-pay policy or anticipated retirement surrender, obtain the reviewed annual split from your adviser.
  3. Copy the refund schedule and taxable bases.
    Use a refund amount or a rate relative to cumulative payments.
    Leave unverified refunds unchecked; check a confirmed zero and enter zero.
    Recheck the units when switching between amount and rate.
  4. Select the exit and policy year, then calculate.
    Choose corporate surrender, maintenance or director transfer.
    Unverified facts keep tax results pending, and the different surrender points are not simultaneous receipts from one policy.
  5. Save assumptions and confirm the actual treatment.
    TXT and print include verification states, inputs, results and official sources.
    Reconcile the illustration and ledger, then self-confirm the completed adviser review or evidence handover.

Fictional example: KRW 36 million a year for five years

A simple example staying in the same bracket

The fictional policy pays KRW 3 million monthly for five years: KRW 180 million in total, with a KRW 150 million surrender refund at the end of year 5.
The corporate base before insurance is KRW 500 million each year, with full earned-expense eligibility and period timing assumed verified.
The base after premium expense remains in the 20% national and 2% local bracket.

National and local tax effects for five annual KRW 36 million premiums and a KRW 150 million refund
ItemNationalLocal
Cumulative premium assessed-tax reductionKRW 36,000,000KRW 3,600,000
Year 5 incremental surrender taxKRW 30,000,000KRW 3,000,000

National-only net cost is 180,000,000 − 150,000,000 − 36,000,000 + 30,000,000 = KRW 24,000,000.
Including standard local tax, it becomes 180,000,000 − 150,000,000 − 39,600,000 + 33,000,000 = KRW 23,400,000.
The premium-period reduction is not all a permanent gain; surrender taxation belongs in the same review.

With capitalized premiums

If the reviewed annual split is KRW 10 million capitalized and KRW 26 million earned expense, the year 5 tax asset is KRW 50 million.
The surrender base change is KRW 150 million − KRW 50 million = KRW 100 million, producing KRW 22 million additional national/local tax.
Cumulative premium tax reduction is KRW 28.6 million, leaving the same KRW 23.4 million net cost under this fixed-bracket example.
Different annual bases or rates need not produce that equivalence.

With extinguished prepaid basis

A KRW 1 million annual payment, KRW 200,000 capitalization and KRW 300,000 earned expense leave KRW 500,000 prepaid.
A KRW 600,000 surrender refund minus KRW 200,000 asset and KRW 500,000 prepaid produces a −KRW 100,000 base change.
With sufficient taxable income, assessed tax may decrease; a negative change is not an extra insurer refund.

A director transfer needs wage-versus-retirement classification

NTS Income Tax Division-3449 cites Written Team 1-309 and describes previously paid premiums as wage income, with receipt and payment timing on the holder/beneficiary change date.
Its inquiry involves a former CEO who remains employed after stepping down.
The calculator shows this personal-income scenario only when the user confirms the case applies or enters a separately verified wage valuation.

Reference tax in a confirmed wage scenario

With an existing taxable base after deductions of KRW 50,000,000 and a paid-premium-case value of KRW 180,000,000, the progressive assessed-tax difference is KRW 61,220,000 nationally, plus a standard local reference amount of KRW 6,122,000.
Income Tax Act Article 55 supplies the 6, 15, 24, 35, 38, 40, 42 and 45% brackets, but earned-income deduction changes and tax credits are excluded and held constant.
This is not final withholding or settled personal income tax.

NTS Written-2022-Withholding-3587 describes whole-life policy succession at actual executive retirement: retirement income based on policy valuation, with amounts above the executive retirement-income limit treated as wages.
A different product or payment reason does not automatically fit that interpretation.
The retirement branch remains pending because valuation, service period, remuneration and the statutory executive limit need separate evidence.

The calculator does not automatically deduct the corporation’s premiums a second time on transfer.
Previously expensed premiums, remaining assets transferred, wage or retirement deduction limits, related-party market value and income disposition are separate issues.
The director’s noncash benefit is also different from a corporate cash surrender refund; do not add them together.

Interpret zero, pending and negative results separately

Verified zero versus missing information

A verified zero refund is calculated as zero cash at that point.
A missing refund schedule remains pending; the calculator does not invent amounts or rates.
Unverified contract tax also remains pending rather than zero, so it does not mean the event is tax-free.

Negative incremental surrender tax

When closing asset and prepaid basis exceed the refund, the surrender base change can be negative.
A deductible change can reduce the current assessed tax; it does not provide extra cash support or an automatic tax repayment.
Review later-year consequences separately if a loss or carryforward is relevant.

Maintenance cash cost versus surrender net cost

Maintenance cash cost deducts premium tax reductions from payments and excludes the policy’s asset value.
It should not be interpreted as a loss on the maintained policy.
Each surrender row ends the policy in a different year, so taxes across the alternative exits cannot be summed.

Practical scenarios and input cautions

A CEO offered full premium deductibility

Verify the actual corporate base and period allocation before expecting a large reduction just because premiums are high.
Save the conditional full-expense and tax-reviewed split scenarios to identify the assumptions behind a sales illustration.
Changing a confirmation box does not fulfill a legal condition.

An accountant considering a cash surrender

Reconcile the intended surrender year’s base with closing tax asset and prepaid amounts.
Separate the insurer’s refund from the corporation’s tax change when preparing the closing review.
Payment timing, liquidity, replacement death protection and reenrollment terms need assessment beyond this net-cost figure.

Refund rates above 100% and product guidance

The FSS report distributed on 2025-02-24 records the December 2024 supervisory guidance on corporate policyholders and product design keeping refund rates within 100% throughout the term.
It separately discusses pre-guidance products, so an older illustration above 100% is not automatically an impossible contract under current law.
The calculator warns above 100%, requests issue-date and illustration review, and does not cut down the entered value.
Do not add unofficial commission rebates or maintenance bonuses as if they were an after-tax policy refund.

  • The plan keeps the policy in force until the selected exit; intermediate death claims, policy maturity and additional premium changes are excluded.
  • Credits, minimum tax, loss carryforwards, penalties, social insurance, inheritance/gift tax, market value and executive retirement limits need separate review.
  • Inputs are whole won; tax is rounded down to won and may differ from statutory filing rounding.
  • Opening asset and prepaid basis are zero; entering only a mid-contract ledger would omit earlier basis.
  • Inputs are used in local browser state; policy evidence and personal tax bases are not stored on the server.

Frequently asked questions

Does no maturity benefit guarantee full expense?

Verify the corporate parties, retirement timing and refund estimation, business purpose and period allocation; foreseeable retirement surrender or prepaid amounts require a separate split.

Can I use the refund rate as the asset percentage?

A point-in-time refund rate describes returned cash and does not determine capitalized premium or earned-expense proportions.

Can surrender be taxed after premiums were deducted?

When premiums were fully earned expense with no tax basis remaining, the model includes the whole corporate refund in the surrender year’s taxable income.

Are limited-pay premiums deducted as paid each year?

Protection can continue after payments stop, so verify the period-based expense and remaining prepaid basis instead of assuming payment equals earned expense.

Is every director transfer valued at paid premiums?

The paid-premium wage case and actual-retirement policy-valuation case have different facts; an unverified classification or valuation keeps the result pending.

Does zero current tax mean there is never a benefit?

It means assessed tax does not fall in the current modeled year, not that future loss carryforward treatment has been evaluated.

Can I enter a refund above 100%?

Older contracts can still be reviewed; the input is allowed with a warning to check the issue date and post-December-2024 product-design guidance.

Will the tool recommend the cheapest surrender date?

It compares annual cost information but does not decide the best exit or enrollment because death protection, opportunity cost, liquidity and other insurance terms also matter.

Official evidence and update scope

Rule year: 2026; official-source verification date: 2026-10-07.
The Korean National Law Information OPEN API confirmed current Corporate Tax Act MST 280349, its Decree MST 290843, Local Tax Act MST 282559, Income Tax Act MST 280405 and its Decree MST 290841.
The relevant act provisions and tax-rate articles apply from 2026-01-01; the reviewed decrees have the 2026-10-01 text.
A search result’s 2026-07-01 partial effective date was not treated as the start date for every tax rate.

Expense and timing reference Corporate Tax Act Articles 19 and 40; rates reference Article 55 and Local Tax Act Article 103-20; executive pay, retirement deductions and disposition reference Decree Articles 43, 44 and 106.
Personal-income boundaries reference Income Tax Act Articles 20, 22 and 55 and Decree Article 38.
The personal local reference amount is 10% of the national-tax difference, consistent with Local Tax Act Article 92 standard rates; ordinance-specific rate adjustments and separate filing rounding are excluded.
NTS interpretations address their stated facts; recheck current interpretation, actual allocation, valuation and retirement reason before applying a treatment.

Use the illustration and review to confirm treatment

Enter premiums and verified refunds above, then review earned expense, assets, prepaid basis and surrender taxes together.
Keep missing facts visible in the review as questions to resolve instead of filling them with invented assumptions.
Save or print the TXT review with its assumptions and agree on expense timing, surrender or transfer treatment with your tax adviser.