On March 13, 2025, the Executive Yuan approved a draft amendment to certain provisions of the Insurance Act, stipulating that the surrender value of a life insurance policy shall not be subject to compulsory enforcement if it falls below a designated minimum standard of living. This amendment responds to Ruling No. 897 (Tai-Kang-Da-Zi, 2019) issued by the Supreme Court Civil Grand Chamber, which, for the first time, affirmed that the surrender value under a life insurance contract may be considered an object of compulsory enforcement.

According to the draft amendment, if the surrender value of a life insurance policy held by a debtor is less than the amount equivalent to three times 1.2 times the monthly minimum cost of living per person, as announced by the central competent authority or the municipal government of the debtor’s locality, such value shall be exempt from seizure or enforcement. This measure is intended to protect the debtor’s basic standard of living.

Furthermore, in order to ensure that the essential protection provided by a life insurance policy can be preserved during enforcement proceedings, the draft introduces a new mechanism inspired by the “right of intervention” under foreign legal systems. A new provision is proposed, allowing a third party to intervene and become the new policyholder under the following conditions, thereby maintaining the policy’s effectiveness when the original policyholder is a debtor and the policy has been seized, or the policyholder has been declared bankrupt, or liquidation proceedings have been initiated under the Consumer Debt Clearance Statute (Taiwan):

1. The third party is the named beneficiary designated by the policyholder or the insured, or a relative within a specified scope;
2. The third party obtains written consent from both the policyholder and the insured;
3. The third party pays the enforcement authority or its designated recipient an amount equivalent to the surrender value of the policy;
4. The third party notifies the insurer in writing of the change in policyholder.