The nation’s top financial watchdog is poised to censure a local insurance company for denying benefits to families of policyholders who committed suicide, according to officials from the Financial Supervisory Service on Monday.

The move is expected to have deep repercussions on the South Korean life insurance sector, the officials said.

ING Life Insurance Co. was found to have denied payouts of accidental benefits worth 20 billion won ($19.7 million) in some 90 suicide cases, citing erroneous provisions in their contracts with policyholders.

Before 2010, local life insurance companies commonly promised to pay out accidental death benefits, which are far higher than general death benefits, even in cases of suicides.

However, ING Life refused to pay out benefits to policyholders who killed themselves between 2003 and 2010 and instead gave them general death benefits, which the financial watchdog sees as running counter to the terms of the insurer’s contract with policyholders.

(tellme@heraldcorp.com)