Free “win-win insurance” to repay small-business owners’ loans after death or serious illness

Small-business owners in six South Korean regions will be able to join a free insurance program that pays their debts if they die or develop one of three serious illnesses.

The Financial Services Commission said the program, developed with insurers and local governments, will launch this month. The insurance industry has set aside a combined 30 billion won in a mutual-support fund to provide free coverage for vulnerable groups.

The first product, a credit life insurance policy, will repay up to 10 million won in a policyholder’s loan principal and interest. It covers death and diagnoses of cancer, cerebral hemorrhage or acute myocardial infarction. Eligible small-business owners in Gyeongsangnam-do, Gyeongsangbuk-do, Gwangju, Jeollanam-do, Jeju and Chungcheongbuk-do can enroll without paying premiums if they meet each local government’s requirements.

Borrowers who join the policy can also receive a preferential interest-rate reduction of up to 0.3 percentage points on loans from Industrial Bank of Korea. The program also includes products tailored to regional needs. In Jeju, a climate insurance policy will compensate daily construction workers who stop work after a heat-wave warning. The payout will equal 80% of the worker’s standard hourly wage multiplied by the hours not worked. In North Jeolla Province, small-business owners who buy storm and flood insurance supported by the Ministry of the Interior and Safety will receive full coverage for their deductibles.