[Practical Finance] Avoid Duplicate Enrollment by Temporarily Suspending My Real Expense Insurance

Tips to Save on Actual Loss Insurance Premiums
Possible to Resume Personal Actual Loss Insurance After Retirement
Switch to Personal Actual Loss Insurance if Group Actual Loss Exceeds 5 Years
Easy to Change 1st and 2nd Generation Subscribers to 4th Generation
4th Generation Advantageous if Hospital Use Is Low
Check with Insurance Association's Simple Calculator

[Asia Economy Reporter Changhwan Lee] #. Park, a 58-year-old housewife living in Gwangjin-gu, Seoul, spends about 180,000 KRW monthly on indemnity health insurance (실손보험) premiums for her family of four, including her husband and two children. Although the indemnity insurance premiums seem high relative to household income, she does not consider canceling it due to the significant benefits. However, she is looking into ways to save on the annually increasing premiums.

Indemnity insurance is a popular private insurance, with about 80% of the entire population enrolled, earning it the nickname "the second national health insurance." It is popular because it covers medical expenses not covered by the public health insurance.

Since most households have indemnity insurance, the premium burden is considerable. Many families spend tens of thousands of KRW monthly on insurance premiums, including other insurances, which is a financial burden. Here are several tips to save on indemnity insurance premiums.

Utilize the Indemnity Insurance Suspension System in Cases of Duplicate Enrollment

Even if you enroll in multiple indemnity insurances, only the actual medical expenses borne by the insured are covered, and no additional insurance payments are made, so duplicate enrollment should be avoided as much as possible.

However, duplicate enrollment can occur, for example, when someone already has a personal indemnity insurance and their new employer provides group indemnity insurance as a basic benefit.

If the benefits of the group indemnity insurance provided by the company are similar to or better than the personal indemnity insurance, the insured can temporarily suspend their personal indemnity insurance.

This is called utilizing the indemnity insurance suspension system. By contacting the insurer, the insured can temporarily suspend their personal indemnity insurance to save on premiums and later resume it when the group indemnity insurance ends due to retirement or other reasons. This system applies to those who have maintained personal indemnity insurance for more than one year and are enrolled in overlapping group indemnity insurance.

To reactivate the suspended personal indemnity insurance after retirement or job change, the insured must apply to the insurer within one month after retirement. The one-month deadline is set to prevent moral hazard where consumers intentionally remain uninsured and then resume personal indemnity insurance after illness occurs. If multiple group indemnity enrollments and terminations occur due to job changes, suspension and resumption of personal indemnity insurance are possible without limit on the number of times.

However, a downside of the indemnity insurance suspension system is that when suspending and resuming insurance, coverage resumes with the personal indemnity insurance product currently sold or held by the insurer at the time of resumption, not the previously suspended product. While coverage items and conditions such as exclusions remain the same, the compensation method may differ.

For example, a first-generation personal indemnity insurance subscriber with a 0% co-payment rate who uses this system and resigns this year may be re-enrolled under a fourth-generation indemnity insurance with a 20-30% co-payment rate. For frequent hospital visitors, maintaining duplicate enrollment might be better, so it is advisable to consider personal circumstances when using this system.

Group Indemnity Insurance Can Be Converted to Personal Indemnity Insurance

The personal indemnity conversion system allows employees who have been enrolled in group indemnity insurance for more than five years to convert to personal indemnity insurance within one month after termination of group indemnity insurance due to retirement or other reasons.

If the insured did not previously have personal indemnity insurance, they can use this system to save on premiums. The conversion target includes company employees who have been enrolled in group indemnity insurance for the past five years and fall within the personal indemnity insurance age range. Considering typical retirement ages, conversion to personal indemnity insurance is possible up to at least age 65.

However, there are conditions to be aware of. If the insured received insurance payments of 2 million KRW or less in the past five years of group indemnity insurance and have no history of treatment for ten major diseases, conversion is possible without examination. Otherwise, the insurer may refuse conversion.

The applicant must request conversion from the insurer of the previous group insurance within one month after group indemnity insurance termination (retirement, etc.). Conversion applications can also be made before retirement, but the applicant must submit relevant documents proving their retirement status to the insurer.

If multiple insurers have divided coverage items of group indemnity insurance (such as injury hospitalization, disease hospitalization), the consumer can apply for conversion to the insurer of their choice among them.

The converted product will be the personal indemnity insurance currently sold by the insurer at the time of conversion, and detailed subscription conditions such as coverage items, coverage amounts, and deductibles will be applied identically or most similarly to the previous group indemnity insurance.

Comparison of Actual Loss Insurance Premiums by Generation (Source: General Insurance Association)

Old-Generation Indemnity Insurance Can Be Converted to the Latest Indemnity Insurance

Subscribers can easily convert old-generation indemnity insurance, such as first- or second-generation indemnity insurance, to the relatively cheaper fourth-generation latest indemnity insurance.

Old-generation indemnity insurance has lower deductibles but higher premiums, whereas the latest indemnity insurance tends to have higher deductibles. For those who frequently visit hospitals, maintaining old-generation indemnity insurance is better, while those who do not visit hospitals often can save on premiums by converting to fourth-generation indemnity insurance.

The fourth-generation indemnity insurance features premiums approximately 15-75% cheaper depending on the type of existing subscription at the time of contract conversion. Especially, insurers are currently offering a benefit of a 50% premium discount for one year on contracts converted to fourth-generation personal indemnity insurance by the end of this year for first-, second-, and third-generation personal indemnity insurance subscribers.

Simple Calculator for Conversion of Indemnity Insurance Contracts (Source: General Insurance Association)

The Insurance Association recently introduced a simple indemnity insurance contract conversion calculator to help subscribers considering conversion easily compare old-generation indemnity insurance and fourth-generation indemnity insurance.

The simple calculator provides a service that calculates and compares specific figures to determine whether converting to fourth-generation indemnity health insurance is advantageous or if maintaining the existing product is better by inputting information such as annual medical usage. It can be accessed on the online insurance supermarket Insurance Damoa website under 'Indemnity Health Insurance Contract Conversion Simple Calculator.'