[Becoming an Insurance Insider] Economic Activities Halted Due to 'COVID-19'... Will Policies Be Canceled If Premiums Are Unpaid?

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[Asia Economy Reporter Oh Hyung-gil] As the novel coronavirus infection (COVID-19) spreads nationwide, the number of confirmed cases has exceeded 7,000. There are also cases of patients receiving treatment and being discharged after recovery. If you cannot work due to a COVID-19 diagnosis and cannot pay your insurance premiums, will you not receive insurance benefits? What are the ways to maintain insurance without cancellation?

According to the insurance industry on the 8th, the Life and Non-life Insurance Associations have prepared and are implementing 'Measures to Prevent the Spread of COVID-19 and Support Crisis Overcoming.' They are granting a grace period for premium payments to customers affected by COVID-19 and will promptly pay insurance claims when filed.

In addition, the life insurance industry will also grant a grace period for contract loan interest payments. The non-life insurance industry plans to grant a grace period for loan principal and interest repayments and debt collection, and extend loan maturities when they come due.

Also, if you apply for insurance contract loans for purposes such as living stabilization funds, payments will be made promptly, and if tourism or travel is canceled due to COVID-19, the full amount of guarantee insurance premiums for small business owners related to travel will be refunded.

However, generally, if premiums are not paid, the insurance contract is immediately invalidated. Therefore, when customers have difficulty paying premiums, there are systems such as the reduced paid-up insurance system, automatic loan payment system, and single premium paid-up system that can be used instead of cancellation.

If the monthly premium amount is burdensome, premiums can be lowered by adjusting the main contract and riders.

The reduction system allows lowering the coverage amount while also reducing the premiums paid. For example, if the coverage amount is reduced from 20 million KRW to 10 million KRW, the premium is reduced by about half. If it is difficult to pay premiums for a long period, the reduced paid-up insurance system (substitute reserve insurance) can be used. This method shortens the term to lower the insurance amount and uses the accumulated reserves to pay the remaining premiums.

Premiums can also be paid through policy loans. Insurance companies pay premiums by borrowing part of the surrender value through the automatic loan payment system. However, since it is a loan, a separate interest determined by the insurer must be paid, and at maturity, the remaining amount after deducting the loan is received.

This content was produced with the assistance of AI translation services.