Taiwan FSC Imposes Two Restrictions on Investment-Linked Insurance Policies

Benefits under investment-linked insurance policies fluctuate with the value of their underlying assets, leaving policyholders to bear most of the investment risk. Total loss-absorbing capacity, or TLAC, bonds may be written down or converted when a financial institution is in distress. Taiwan's Financial Supervisory Commission has therefore tightened the rules to prevent high-risk assets from eroding long-term policyholder protection.

The FSC announced on April 28, 2026, that investment-linked policies may not be linked to TLAC bonds. For quasi-discretionary investment-linked policies, funds related to non-investment-grade and emerging-market bonds may not exceed a combined 20%, with non-investment-grade bonds capped at 10%. Standard investment-linked policies may not be linked to either category. The FSC's Insurance Bureau said no existing products would be affected.