Is First-Generation Indemnity Insurance Always Better? Switch in These Cases [Siljun Jaetech]

5th Generation Indemnity Insurance Premium Expected at 7,000 KRW per Month
New Coverage Items Added for Pregnancy and Childbirth
Authorities Considering "Mandatory Generation Switch" if Needed

Known as the "second national health insurance," indemnity health insurance is divided into generations 1 through 4 depending on the enrollment period. The coverage scope, as well as the coverage items, renewal cycles, and deductible rates, differ by generation. With the news of the launch of the "5th generation indemnity insurance," which offers premiums at about half the current level and includes coverage for pregnancy and childbirth, a movement to cancel existing policies and switch to the new product is anticipated. We have summarized the tips for switching indemnity insurance while examining the characteristics of each generation.

It is often said that 1st generation indemnity insurance is the best, and one should never respond to insurance company calls urging product changes. However, an insurance industry insider advised, "A specific generation of indemnity insurance is not necessarily advantageous or disadvantageous for all subscribers." Depending on individual circumstances, it may be better to maintain the existing indemnity insurance, but the new product could also be beneficial, so careful analysis is necessary.

5th Generation Indemnity Insurance Premium Expected at 7,000 KRW per Month... Also Offers Exceptional Compensation

First, subscribers burdened by high indemnity insurance premiums should consider switching generations. For example, a man in his 40s who is a 1st generation subscriber, often called "old indemnity," must pay a premium of 54,300 KRW per month (based on Insurance Company A). The 2nd generation premium is about 33,700 KRW per month. In contrast, the most recently sold 4th generation indemnity insurance has a premium of about 14,600 KRW per month. Since July last year, a non-reimbursable premium differentiation system has been implemented only for 4th generation indemnity insurance, allowing premium discounts if the insured has little or no non-reimbursable medical expenses claimed within a year.

If switching to the newly launched 5th generation indemnity insurance, the premium can drop to around 7,000 KRW per month. The 5th generation indemnity includes non-reimbursable medical expenses as optional riders, subdivided into "Rider 1," which covers non-reimbursable medical expenses for severe diseases and injuries, and "Rider 2," which covers non-severe non-reimbursable medical expenses. Subscribing only to Rider 1 reduces the monthly premium to about half that of the 4th generation, and including Rider 2 is expected to lower it by about 30% compared to the 4th generation. However, since Rider 2 covers non-severe treatments, the coverage limits, deductibles, and review criteria are significantly lower than those of the 4th generation.

When 1st and 2nd generation indemnity insurance subscribers switch to the 5th generation, compensation is also expected. At the policy discussion held on the 9th by the Presidential Medical Reform Special Committee (Uigeaetwi), incentives related to contract repurchase for indemnity insurance were mentioned. The plan is for insurance companies to compensate consumers wishing to switch generations according to financial regulatory recommendations and then cancel the existing contracts.

To find out whether switching to the new indemnity insurance is beneficial, you can use the "Indemnity Health Insurance Contract Conversion Easy Calculator." The General Insurance Association and the Life Insurance Association provide specific figures comparing whether switching products or maintaining the existing product is advantageous by inputting medical usage data. This can be checked on the online insurance supermarket "Boheom Damoa" website.

5th Generation Indemnity Insurance Advantageous for Pregnant Women... New Coverage Items for Pregnancy and Childbirth

Indemnity insurance subscribers planning pregnancy and childbirth may also benefit from the 5th generation indemnity insurance. From the 5th generation, pregnancy and childbirth are newly established as reimbursable medical expenses (O code). Treatments with high out-of-pocket rates under health insurance, such as cesarean section adhesion prevention agents, can also receive insurance payouts. Until the current 4th generation indemnity insurance, there was controversy over whether pregnancy and childbirth qualify as "accidental events," the basic principle of insurance, so they were not considered within the insurance scope.

It is also useful to know that 1st generation indemnity insurance does not cover treatments for anal, skin, dementia, psychiatric, infertility, or obesity conditions. In the 4th generation indemnity insurance, if these items are reimbursable, partial or full compensation can be received.

Frequent Manual Therapy? Uigeaetwi Warns of Strict Measures Against Medical Overuse

For indemnity insurance subscribers who frequently receive non-reimbursable treatments for mild illnesses, it may be better to maintain the existing product. Although the 1st generation indemnity insurance premium is expensive, except for life insurance company products, there is no deductible, and the 2nd and 3rd generations require only 10-20% cost-sharing. The 1st generation also compensates for non-reimbursable medical expenses such as manual therapy without limits on amount or frequency. The maturity age is 80 or 100 years, and the renewal cycle is 3 or 5 years, making the maturity and renewal periods the longest.

However, since Uigeaetwi has decided to prevent medical overuse related to indemnity insurance, some restrictions on non-reimbursable treatments are highly likely in the future. In particular, the Financial Supervisory Service will establish and apply review criteria for major non-reimbursable treatments such as cataracts, injections, and spinal surgeries, applying them to all generations of indemnity insurance. The financial authorities are also considering mandatory indemnity insurance conversion through legal amendments if reforms are not achieved despite these efforts.

At the discussion on the 9th, Ko Young-ho, Director of the Insurance Division at the Financial Services Commission, stated, "Since indemnity insurance contract repurchase is a private contract, the consent of the contracting parties is essential," but added, "If repurchase alone is insufficient, applying policy change clauses to early subscribers through legal amendments may be considered if necessary."