November 27, 2024

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Posters introducing the abolishment of the “Korean age” system from Wednesday, is attached at Songpa-gu Office in eastern Seoul, Tuesday. (Yonhap)

Abolishment of the “Korean age” system, which came into effect Wednesday, will not make a substantial difference in the local finance sector, as the industry has already been using the internationally recognized age counting system.

The country’s top finance regulator Financial Supervisory Service launched a counseling center under its call center on Wednesday to respond to consumers experiencing difficulties with the new age system.

The FSS, however, expects that the new age system will not have much impact on the finance sector, as it has not been using the Korean age system for much of its official businesses.

"(The new age system) will not have much impact on the finance business or consumers as finance-related laws and regulations state the use of the international age system. If not stated, the interpretation on (the laws and regulations) are based on the international age system according to civil law," the FSS said when the age revision law passed at the National Assembly in December.

As the FSS said, most financial institutions have been using the international age system for their business, including banks and card companies. For instance, a person has to be 18 years old or older by international age to apply for a credit card.

On the other hand, insurance companies use their own "insurance age" system.

Insurance age is calculated based on the international age when a person signs up for an insurance subscription. If more than six months has passed since the person's last birthday, another year is added to that age. If less than six months has passed, the international age is maintained.

The insurance companies use the system as the industry views it unfair for those with different birthdays to be applied different insurance rates. For instance, those aged 1 day and 11 months are both aged 0 under the international age system, but they have different degree of risks, according to the insurer industry.

For policies that cover a person’s life and health, insurers use the insurance age system, when drawing up the insurance rate, confirming the date for expiry and more.

However, for other provisions that specify age, the international age system is used, such as a special contract under car insurance which offers a discount on the insurance rate for drivers aged 30 or older by international age.

Also, insurance contracts affected by the law go by international age. For example, the Commercial Act prohibits insurance contracts that designate the death of a person under 15 by international age.

As different age systems can cause confusion, financial authorities will review the plan to have insurance companies drop the insurance age system and adopt the international age system in the long term for administrative convenience.

By Im Eun-byel (silverstar@heraldcorp.com)