Group and personal indemnity insurance overlap in Korea

Why group and personal indemnity cover overlap

Many Korean employers enrol staff in group insurance as a benefit, and it often includes indemnity medical cover that repays actual medical costs. This is group silson (indemnity insurance). The company pays the premium or shares it with staff, and the company is the policyholder. Meanwhile, many people already bought a personal indemnity policy before joining. So the moment they start work, they hold two of the same kind of cover. The catch is that indemnity insurance, unlike fixed-sum insurance, pays only the actual loss. Two policies cannot pay your bill twice, so you keep paying the personal premium without receiving more in return. Cancel the personal policy, however, and when group cover ends after you leave, your age and medical history may make it hard to join again. The pause-and-resume scheme was designed for this dilemma. This article covers the scheme and how to decide.

How benefits split when you hold both

When someone with two or more indemnity policies claims a medical bill, each insurer shares the actual cost in proportion to the benefit it calculates under its own terms. This is called proportional payment. The total you receive does not exceed the covered part of what you actually paid. Where deductible rules differ, the more favourable one may partly apply, so you might get slightly more than with one policy, but never double. That makes the personal premium in an overlap mostly the cost of duplicate cover. Still, the two policies may not cover exactly the same things. A group plan may cover hospital stays but not outpatient visits, have a low limit, or exclude family members; designs vary by employer. So the starting point for judging overlap is to obtain the group plan's coverage from your HR team and set it beside your personal policy item by item.

• Multiple indemnity policies split the actual bill
• Insurers share by the ratio of their calculated benefits
• Group plan coverage varies by employer
• Judge overlap by comparing item by item

Pausing a personal policy: what stops

The pause scheme lets someone with group indemnity cover suspend both premiums and cover on an overlapping personal indemnity policy. It was prepared by the Financial Services Commission (FSC) and began in December 2018. Because it is a pause, not a cancellation, the contract remains and the right to revive it is kept. Under FSC guidance, you must have kept the personal policy for at least one year, and the part of indemnity cover that overlaps with the group plan is what gets paused. If your personal indemnity cover is a rider on another policy, only the rider can be paused while the main contract continues. During the pause you pay no premium but also have no personal cover, so medical bills are claimed only on the group plan. You apply to the insurer that holds your personal policy and may be asked for proof of employment. Details and documents vary by company and time, so check with the insurer first.

• You are covered by a group indemnity plan
• You have kept the personal policy at least 1 year
• Only the overlapping indemnity cover is paused
• Apply to the insurer of the personal policy

Resuming: the 1-month deadline and product changes

When group cover ends, for example on leaving the job, you can revive the paused policy. Under FSC guidance, applying within one month of the group cover ending lets you resume without fresh health underwriting. Miss it and no-underwriting resumption is lost; you are assessed as a new applicant, and any condition that developed meanwhile may make joining hard. Media have reported cases of people who missed the deadline and could not resume. Also note which product you return to. The paused contract is generally not revived as it was; resumption usually happens on the indemnity product on sale at that time, and insurers' own notices say the resumed product's deductibles and cover may differ from before. If you hold an older generation of indemnity policy, conditions may change when you pause and later resume. Before pausing, ask the insurer which product would apply on resumption and keep a record of the answer.

Example: what you get and what you save

The following is a hypothetical example. A worker with both group and personal indemnity cover pays KRW 200,000 for outpatient treatment, and under each policy's terms both would pay KRW 160,000. The two insurers do not pay KRW 160,000 each for KRW 320,000; together they pay around KRW 160,000, because you cannot receive more than you paid. Now the premium. Assume the personal policy costs KRW 20,000 a month; a year of overlap costs KRW 240,000. Pausing saves that. During the pause, though, only the group plan covers you, so if it excludes outpatient care, that part is left bare. And if you do not apply to resume within one month of leaving, a gap opens; even if you do resume, the conditions of the product then on sale apply. The decision weighs the premium saved against these risks. Actual amounts depend on terms and premiums.

Common misconceptions

A few misconceptions come up often with overlapping indemnity cover. First, that two policies pay double; as shown, they split the actual bill. Second, that pausing equals cancelling. Cancelling ends the contract so rejoining means underwriting, whereas a pause keeps it and allows revival without underwriting within the deadline. Third, that the personal policy revives automatically when you leave; you must apply within the deadline yourself. Fourth, that resumption restores the old terms; the resumed product may differ. Fifth, that group cover makes a personal policy pointless in every case. If the group plan is narrow or your departure date is uncertain, the answer can change.

• Two policies pay double: they split the actual bill
• Pause equals cancel: the contract stays and can resume
• Leaving revives it automatically: apply within 1 month
• Resuming restores old terms: the product may change

How to decide whether to pause

Rather than deciding on premium alone, it is safer to go through these steps. First, get the group plan's details and compare hospital, outpatient and prescription cover, non-covered treatment, limits and deductibles with your personal policy item by item. Next, check your personal policy's generation; the older it is, the more you should weigh how terms might change on resumption. Then consider how long you expect to stay and whether the group plan will keep the same terms each year; employers can change it annually. If you would pause, ask the insurer in advance which product and documents would apply on resumption. Finally, if you pause, mark the one-month deadline in your calendar for when you leave or the group plan ends. Our articles on reviewing your insurance and on indemnity insurance generations can help too.

• Compare group and personal cover item by item
• Check your personal policy's generation
• Consider tenure and whether the group plan will last
• Ask the insurer which product applies on resumption
• Mark the 1-month deadline in your calendar

Common case 1: a gap between jobs

Some people change jobs while their personal policy is paused. If days or weeks pass between the old employer's group cover ending and the new one's starting, you may have no indemnity cover at all in between. Note too that this gap overlaps with the resumption deadline. If the new employer has no group indemnity cover or a narrow one, the usual option is to apply to resume your personal policy within one month of the old group cover ending. If the new employer does have group cover, ask the insurer whether the pause can continue. How a gap in group cover is handled should be confirmed with the insurer, so ask early if a gap is likely. When setting your move dates, confirm the old group plan's end date with HR, and getting proof of employment or of leaving in advance makes resumption easier.

Common case 2: what cover remains after retirement

When you retire and will not rejoin a group plan, the choices change. If you have a paused personal policy, resuming it within one month is the first route. For those who relied only on group cover for years, there is also a conversion scheme letting retirees who were in a group indemnity plan for a certain period move to a personal policy without underwriting; check the conditions and deadline with the insurer. There are also products for people whose age or history makes ordinary indemnity cover hard to get. Senior indemnity insurance lets older people join, with higher deductibles and lower premiums, while indemnity insurance for people with pre-existing conditions asks fewer underwriting questions but generally has narrower cover and less favourable deductibles. These are alternatives, not the same cover, so compare deductibles and exclusions carefully. Being renewable, their premiums may rise with age, which is worth checking too.

Limits and disclaimer

This article explains in general terms overlapping group and personal indemnity insurance in Korea and the scheme for pausing and resuming personal cover; it does not recommend buying or cancelling any product. The pause condition (at least one year kept) and the resumption deadline (one month after group cover ends) follow Financial Services Commission guidance, while the product applied on resumption, required documents, cases where resumption is restricted and the conversion scheme's details vary by insurer and time and may change with reforms. Rules can change from year to year, so check official guidance from your insurer, the Financial Supervisory Service and the Financial Services Commission before deciding. Be cautious with calls that use advice as a pretext to have you cancel existing indemnity cover and switch, and remember a cancellation is hard to undo. This is not insurance or legal advice; if unsure, ask your insurer's customer centre or the Financial Supervisory Service.