The duty of disclosure before buying insurance

What the duty of disclosure is

Insurance is a contract in which the insurer looks at your risk to decide whether to accept you and at what price. Yet the person who knows their health and treatment history best is the applicant. So in Korea the Commercial Act requires the policyholder and the insured person to truthfully disclose the material facts the insurer asks about when the contract is made. This is called the pre-contract duty of disclosure. In practice it is done by answering the questionnaire attached to the application, and the law presumes that matters asked in the questionnaire are material. In other words, what you must disclose is defined by what the questionnaire asks, not by what you think matters. On the basis of your answers the insurer accepts you, excludes a body part from cover, charges a higher premium, or declines. A single answer therefore underpins the whole contract. Remember too that where the policyholder and insured are different people, the duty applies to both.

What the questionnaire asks

Items differ by product but follow a similar pattern. On health, the questions ask, split by time window, whether within a recent period you saw a doctor for examination or tests and were diagnosed, treated or prescribed medication, whether you were told to have further tests, whether you were hospitalised or had surgery, and whether you were ever diagnosed with certain serious illnesses. Each question uses its own time window, so read every sentence to the end. Beyond health, questions often cover your job and duties, whether you drive and what vehicle, dangerous hobbies, and other insurance you hold. If your memory is hazy, check the treatment history available from the National Health Insurance Service or your clinic's records before answering. Guesses can later conflict with the records. If you have been collecting a prescription for the same condition for years, confirm both the date of first diagnosis and the most recent prescription; that makes answering easier. Conditions under ongoing management, such as high blood pressure or diabetes, often have their own question.

• Examinations, tests, treatment or medication in a recent period
• Whether further tests were recommended
• Hospital stays or surgery within a set period
• History of certain serious diagnoses
• Lifestyle risks: job, driving, dangerous hobbies

What happens if you breach it

Under the Commercial Act, if material facts are withheld or misstated through intent or gross negligence, the insurer may cancel the contract. On cancellation, the benefit for that event is in principle not paid, and the policyholder receives roughly the surrender value at that point. There are time limits, though. Once 1 month has passed since the insurer learned of the breach, or 3 years since the contract date, the insurer can no longer cancel on this ground. And if it is proven that the undisclosed fact had nothing to do with the event that occurred, the benefit for that event must be paid. For example, if a past stomach treatment was omitted but the injury came from a traffic accident, the benefit itself may be paid, though the contract may still be cancelled. Conversely, if the insurer does not exercise its right within those periods, the contract stands. A breach involving only slight negligence may not be grounds for cancellation either, so disputes often centre on whether there was intent or gross negligence.

• Cancellation possible with intent or gross negligence
• Only within 1 month of the insurer learning of it
• Not on this ground after 3 years from the contract date
• If the omitted fact is unrelated to the event, that benefit is paid

When the insurer cannot cancel

The law and standard policy terms set out cases where the insurer cannot cancel despite a breach. If the insurer already knew the fact when the contract was made, or failed to know it through gross negligence, it cannot cancel. Korean standard terms also bar cancellation once a set period has passed from the start of cover without any claim event (generally 2 years for illness cover, 1 year for contracts that involved a medical examination). Nor can the insurer cancel if the agent or other seller denied you the chance to disclose, prevented you from disclosing truthfully, or encouraged you to answer untruthfully. There may be an exception if it is found you would not have disclosed truthfully even without the seller's conduct, so read the relevant clause in your terms directly. Claiming these exceptions requires records of what happened at the time, so keeping the application materials helps.

• The insurer already knew, or failed to know through gross negligence
• The period set by the terms has passed since cover began without a claim event
• The seller gave no chance to disclose or obstructed it
• The seller encouraged untruthful answers

Common misconceptions

The most common misconception is 'I told the agent, so I disclosed it.' An agent generally has no authority to receive disclosure on the insurer's behalf, so if you said it out loud but marked 'no' on the questionnaire, it may not count as disclosure to the insurer. It has to be written on the questionnaire or application itself. Some feel they must list every minor cold, but you only need to answer what falls within the period and scope each question asks about. 'Health check-ups aren't treatment, so they don't matter' is risky too: if a check-up led to a recommendation for further tests, there may be a question about exactly that. And 'after 3 years you're always safe' does not hold where fraud is involved. In the end, the standard is always the wording of the questionnaire itself, not what anyone says or guesses.

• Told the agent verbally — it must be written on the form
• Must list every visit — only what the questions ask
• Check-ups don't count — some questions ask about follow-up tests
• Safe after 3 years — fraud is treated differently

There is also a duty after signing

The duty of disclosure concerns the moment of contracting; there are also things you must report after signing. The Commercial Act requires you to notify the insurer without delay if you learn during the policy period that the risk of an insured event has markedly increased, and policy terms spell this out as a post-contract notification duty. The typical case is a change of job or duties: moving from office work to on-site manual work, or regularly riding a motorcycle for work rather than commuting, changes the risk class. Reporting it may raise or lower the premium, and if an event happens without notification the benefit may be reduced in proportion to the difference in risk. By contrast, an illness that appears after you join is not subject to the pre-contract duty, so there is no need to report it on that account. Some products also list other changes to report, such as moving house or changing vehicle, so read the relevant clause once.

A checking order for the questionnaire

The questionnaire is easy to click through in minutes, but it is the starting point of any later dispute over a claim. Answering in the order below reduces omissions. For online applications, recheck each question's time window before moving to the next screen. In face-to-face sales too, the rule is to read and mark it yourself rather than letting the agent tick boxes for you. Keeping a copy of the application or a record of the screens afterwards gives you proof of what you answered and how. If a family member is the insured person, confirm their treatment history directly with them. If you are unsure what a question means, ask the insurer before answering rather than guessing 'no'. When in doubt, writing down the facts and leaving the judgement to the insurer reduces later disputes.

• Check recent records first, for example through a treatment history lookup
• Read each question's time window and scope to the end
• If something applies, write the condition, date and treatment specifically
• Mark it yourself rather than leaving it to the agent
• Keep a copy of the application and questionnaire

A common case ①: you notice an omission after joining

Sometimes people realise only after joining that they left a past treatment off the questionnaire. In that case it is best to tell the insurer as soon as possible, before any claim event, and make a supplementary disclosure. Based on what you report, the insurer may keep the contract as is, exclude the relevant body part, adjust the premium, or cancel. Hiding it out of fear of a worse outcome makes a dispute more likely if a related event later occurs. Keep a record of when and how you reported it and the insurer's reply. It is safer to use written or in-app enquiries, which leave a record, alongside phone calls. If you are still within the cooling-off period, withdrawing and reapplying with accurate answers is another option to consider. The cooling-off period runs from the day you receive the policy document.

A common case ②: a medical history makes joining hard

A treatment history does not always make insurance impossible. Having seen a truthful disclosure, an insurer can accept the contract in several ways. Typical ones are an exclusion that removes the affected body part or condition from cover for a period or for the whole term, and a loading that charges a higher premium. There are also simplified-underwriting products for people with existing conditions, which ask fewer questions but cost relatively more. With these too you must answer the questions asked truthfully, and someone who could pass standard underwriting may end up paying more for the same cover by choosing a simplified product. Applying for standard underwriting first and then looking at other options based on the result is the sensible order. A decline at one company or product may not be repeated elsewhere. An exclusion keeps all other cover intact, which can be better than not being able to join at all.

Limits and disclaimer

This article explains general principles of the pre-contract duty of disclosure in Korean insurance and is not legal advice on any individual case. The cancellation periods and exceptions are general rules under the law and standard terms; actual outcomes depend on the wording of the terms and the specific facts. Questionnaire items, time windows and underwriting standards also differ by company, product and time. Products, terms and regulations vary by company and over time, so always check the policy terms, the questionnaire, and official guidance from the insurer and the Financial Supervisory Service before signing. If a dispute arises over a claim, the Financial Supervisory Service's dispute mediation is available, and for complex cases it is safer to get advice from a legal professional. The periods given here are general standards under the law and standard terms. Ask about any unclear question before you sign, and note the date and the person who answered.