Insurance in Korea
How does insurance work in Korea?
In Korea, the word “insurance” can refer to several different systems. The National Health Insurance is a public health insurance scheme that people who meet the relevant eligibility requirements join under Korean law. Private insurance, by contrast, is a contract between an individual and an insurer. It pays a benefit only when an accident, illness or other event covered by the policy occurs.
A private insurance policy usually begins with deciding what kind of risk you want to cover and reviewing the product information and policy terms. When you apply, you identify matters such as the policyholder, the insured person, the policy period, the amount of coverage, the insurance premium and the beneficiary. Products that require underwriting, including some health and accident policies, may ask about your occupation, current health and past treatment. Based on the information provided, the insurer may accept the application, offer different terms or decline it.
Once the contract takes effect, the insurer issues a policy document. This shows the coverage you actually purchased and the policy period. The policy terms set out the events that qualify for payment, the situations that are not covered, the policyholder’s obligations, and the rules for cancellation and renewal. The final contract documents and policy terms matter more than a brief explanation given during a consultation.
An insurance payment is not made automatically simply because an accident or illness occurs. You must file a claim and provide the required documents. The insurer then reviews the claim against the contract and policy terms. Even for the same hospital expense, the outcome may differ depending on whether the National Health Insurance applies, the type of private policy, the amount you must pay yourself, any exclusions and when the policy was taken out.
It helps to keep five terms separate:
- Insurance premium: the amount you pay to keep the policy in force.
- Insurance benefit or claim payment: the amount the insurer pays when the policy’s payment conditions are met.
- Coverage: the risks for which the insurer assumes responsibility.
- Exclusion or non-covered event: a situation in which the insurer does not pay.
- Out-of-pocket amount: the part of an otherwise covered expense that you must pay yourself.
For protection-type insurance products, insurers must explain important matters in a way consumers can understand, including the product’s coverage, premiums, limits and claim-payment procedures, and the scope and duration of coverage. Receiving an explanation does not, however, mean that you have checked the full contract. Review the application, product information, policy terms and policy document together.
What foreign residents should pay particular attention to
Korean insurance terms may not mean what their everyday equivalents suggest. “Eligible to apply,” “covered” and “the claim will be paid” are not the same. An application may be accepted while a particular illness or accident is excluded. A covered expense may still be subject to an out-of-pocket amount or a payment limit. Ask for an explanation of any wording you do not understand before signing, and check afterward that the issued policy matches what you applied for.