Israel to Implement New Life Insurance Rules in 2027

Israel's Capital Markets, Insurance and Savings Authority has finalized new regulations for marketing life insurance policies, set to take effect on February 1, 2027. The rules mandate that insurance companies must maintain any initial discount rate offered to a client for a minimum of ten years. This measure aims to prevent a common practice where insurers attract customers with significant initial discounts, only to gradually reduce them in the early years of the policy.

The new regulations apply exclusively to new individual life insurance policies covering death and related risks, excluding collective and group insurance agreements. Policies already in effect will continue under their original terms.

Under the new framework, if an insurer offers a discount, it must be preserved for at least a decade. While companies are permitted to voluntarily improve terms or extend the discount period, the reform specifically fixes the discount percentage, not the final payment amount. Policyholders' monthly payments may still increase over time if the base rate is age-dependent.

Insurers will be required to notify clients one month in advance of any planned changes or cancellation of preferential terms, providing detailed calculations of the adjusted monthly payments. Initially, the authority considered making discounts indefinite, but reduced the period to ten years following market objections regarding the difficulty of long-term risk and cost forecasting.