South Korea's financial authorities on Monday urged life insurance companies to pay insurance money to the bereaved family of a person who commits suicide as promised in the policy.

The Financial Supervisory Service's recommendation comes on the heels of a ruling on May 12 by the Supreme Court that ordered a life insurance company to pay promised insurance money to the bereaved family of a policyholder who killed himself.

Local life insurers have often refused to make full payments of insurance money, as stipulated in insurance policies, to families who demanded it following the suicide of their loved ones.

"It's a sort of guideline for life insurers. If a policyholder killed himself two years after he bought the policy, the life insurer has to deliver insurance benefits to his bereaved families without fail," an FSS official said.

In a case of suicide by depression or other mental illness, life insurers also have to pay insurance money to the bereaved families of those who take their own lives. In this case, the insurers have to deliver the money regardless of the length of the policy-holding period, he said.

"Insurance terms previously stipulated that insurance money should be paid in case of suicide two years after the purchase of the policy, or for a suicide resulting from a mental disorder," said the official. "If insurers delay or refuse the payment of all suicide insurance money, they may face a probe (by the FSS) into their past payments of insurance money to customers."

From March 2015, the family of a policyholder who kills himself is required to apply for the suicide insurance money within three years of the suicide. The period was extended by one year from the previous two years, the FSS said.

Suicide-related insurance payments amount to 80 million won ($68,000) on average per case, it said.

In fact, unclear insurance terms have caused conflicts between insurance companies and clients, particularly when it comes to policies which cover suicides and deaths caused by disasters.

For years, Korea has had a high suicide rate. Data released in August last year by the Organization for Economic Cooperation and Development showed that an average of 29.1 people per 100,000 here took their own lives, compared with an average of 12 for other OECD member states. (Yonhap)