[Becoming an Insurance Insider] If You Cancel Insurance Due to COVID-19 Financial Hardship, Only You Lose Out

[Editor's Note] Difficult insurance, a straightforward explanation of insurance that remains confusing even after listening to explanations. There is no bad insurance in the world, only insurance that does not suit me. Following easy-to-understand insurance explanations will not be far from becoming an 'insurance insider.'

[Asia Economy Reporter Oh Hyungil] Due to the damage caused by the novel coronavirus infection (COVID-19), the number of consumers who temporarily face difficulties in livelihood and want to cancel their insurance contracts prematurely is increasing. Inquiries about how much their surrender value is have also been frequently received recently.

Because insurance products typically have a surrender value lower than the total premiums paid when canceled early, canceling may result in a loss. Experts advise that it is desirable in the long term to maintain insurance contracts by utilizing various systems.

Representative systems that allow maintaining insurance without paying premiums include premium payment deferment, reduced paid-up insurance, and automatic loan payment.

The premium payment deferment system allows maintaining the insurance contract without paying premiums for a certain period, by deducting the risk premium and expenses necessary for contract maintenance from the surrender value.

The reduced paid-up insurance system stops future premium payments and determines a new insured amount based on the surrender value at that point, fully paying the premium to maintain the contract. The original insurance contract's payment conditions do not change, but the coverage amount decreases.

The automatic loan payment system processes the amount corresponding to the monthly premium as a loan against the insurance contract within the surrender value range, automatically paying it to maintain the contract according to the method set by the company.

Additionally, policyholders can check the criteria for premium payment suspension through the terms and conditions of the subscribed insurance product or the insurance company's consultation window and utilize various methods to reduce premium burdens.

If a policyholder cancels the insurance contract prematurely but wishes to re-subscribe, it is advisable to check with the insurance company whether the contract reinstatement system can be applied before the surrender value of the product is paid out.

Consumers affected by COVID-19 can also apply for premium payment deferment and prompt insurance contract loan disbursement implemented by insurance companies.

The insurance industry supports policyholders facing economic difficulties by accepting applications for payment deferment and loans to stabilize their livelihood, and also implements loan maturity extensions or interest payment deferrals for small and medium-sized enterprises and small business owners.

However, the applicability and criteria of these support systems vary depending on the insurance company or the subscribed product, so it is necessary to inquire with the subscribed insurance company for confirmation.

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