Whole Life Insurance: Death Benefit and Disability Clause Issues

Whole life insurance may not pay death benefits if policyholders become disabled by 80% or more.

### Misuse of Whole Life Insurance and the Risk of Not Receiving Death Benefits
Many people in South Korea have Jongshim insurance, which is essentially a form of whole life insurance providing death benefits. However, due to the discomfort around the concept of death insurance, some policyholders are unaware of its true nature and may end up not receiving the intended death benefits. As life expectancy increases, insurance companies are promoting whole life insurance as a savings or pension product, potentially leading to policyholders misusing and misunderstanding the primary purpose of the insurance. This misuse of whole life insurance raises the risk of policyholders not receiving the proper death benefits when they are needed.

### Death Insurance Benefits and Policy Conditions in a Korean Insurance Company
The largest insurance company in Korea provides death insurance benefits for any cause of death, including suicide after 2 years from the contract date. The policy also states that if the insured becomes 80% disabled from the same cause, they will receive the same benefits as in the case of death. The inclusion of additional clauses in the insurance policy, such as benefits for diagnosis and surgery, has raised questions for some policyholders.

### The Impact of Receiving Death Insurance Payout on Medical Expense Benefits
Having a comprehensive insurance policy can provide coverage for medical expenses while the insured is alive. In a case where an individual with a lifelong insurance policy becomes disabled and is eligible for a death insurance payout, receiving the payout can terminate the benefits for medical expenses, as stated in the insurance contract. The contract specifies that once the death insurance money is paid, the main contract is terminated, extinguishing the additional agreements and ending the insurance benefits for medical expenses, even if the insured person is still alive and incurring medical costs.

### Consequences of Claiming Death Insurance with 80% Disability
Claiming death insurance with an 80% disability status can lead to the repayment of all dual medical expenses received after the disability status, once discovered by the insurance company. The insurance company's criteria for 80% disability include various severe health conditions, and with society aging, the probability of such disabilities is increasing. Claiming the death benefit with over 80% disability makes the individual ineligible for medical expense insurance below that threshold, posing a significant concern.

### Conditions for Receiving Death Insurance Payout
If a policyholder becomes disabled by 80% or more and chooses not to claim the death insurance payout for medical benefits, they may not receive the payout if they pass away after a 2-year warning period. The statute of limitations clause states that if the right to claim insurance benefits is not exercised within 2 years of the accident or disability, the payout may be forfeited. Some insurance companies may promise to pay the death benefit regardless of the circumstances, but it is essential for policyholders to review their insurance policies for any potential limitations on the death benefit.

### Changes in Death Benefits for Critical Illness Insurance Policies
The provision for paying death benefits in the case of 80% disability has been removed from critical illness insurance policies issued after 2010. It is crucial for policyholders with older policies to check if this condition still applies and to report any issues promptly. Failing to claim insurance benefits could lead to bigger problems and should not be overlooked.



### Potential Issues with Death Benefits in Whole Life Insurance Policies
* 💰 Whole life insurance, commonly known as Jongshim insurance in South Korea, is primarily designed to provide a **death benefit to beneficiaries** upon the insured's passing.
* 🏥 Some whole life insurance policies also include additional benefits for medical expenses, such as **hospitalization or surgery coverage**, which can be **crucial during the insured's lifetime**.
* 🔍 However, a potential issue arises when the insured becomes disabled to the extent of **80% or more**, as some policies allow for the death benefit to be paid out in such cases.
* ❌ If the death benefit is claimed due to disability, the main policy is considered fulfilled, and the **additional medical expense benefits** are typically **terminated**.
* ⚖ This creates a dilemma for policyholders, as they must choose between **claiming the death benefit for disability** or **continuing to receive medical expense coverage**.
* 🧠 The **80% disability threshold** is relatively low and can be reached through various conditions, including **losing one eye** or **hearing in both ears**.
* ⏰ There is also a **2-year statute of limitations** for claiming the death benefit after becoming disabled, which may result in the benefit being **forfeited if not claimed within this period**.
* 👴 As society ages, the likelihood of reaching an **80% disability level** increases, making it crucial for policyholders to be aware of these potential issues and **review their policies accordingly**.

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