Financial authorities had originally planned to order all three insurers to halt operations for up to three months, but the penalties were softened after they decided to pay the overdue suicide insurance benefits.

More than 10 life insurers in South Korea had sold policies for accidents that cover disaster-related deaths as well as suicides between 2003 and 2010 before it changed the terms of the policies to exclude suicide.

Under the previous contract terms, the families of policyholders who commit suicide received far higher payments than those who died of natural causes or accidents.

But insurers denied the payouts, arguing that the suicide provision was incorrectly inserted into the contract and that payments for suicide would encourage people to kill themselves.

The issue came to light in 2014 when financial authorities ordered ING Life Insurance's Korean unit to pay overdue suicide insurance benefits. (Yonhap)