In Korea’s year-end settlement, the insurance premium box turns on conditions before amounts. Article 59-4(1) of the Income Tax Act credits 12% of premiums (15% for insurance dedicated to people with disabilities) only for protection-type insurance where the maturity refund does not exceed the premiums paid, and counts only up to 1 million won a year in each category. The decree also includes rent deposit return guarantee fees. We read the articles as written.
1. Ordinary protection premiums earn 12%, up to 1 million won a year. Even if you paid more, the credit is at most 120,000 won. Protection insurance dedicated to people with disabilities has its own 1 million won limit at 15% (up to 150,000 won).
2. Only wage earners, and only for insurance on basic-deduction dependants. Daily workers and people with only business income are excluded.
3. Rent deposit return guarantee fees count too. This applies where the guaranteed deposit is 300 million won or less (Decree art. 118-4(2)6).
The article — article 59-4(1)
Income Tax Act article 59-4(1) Where a resident with wage income (excluding daily workers) pays the following premiums in the tax period under insurance contracts whose maturity refund does not exceed the premiums paid, 12/100 of the amount (15/100 for item 1) shall be credited … provided that where the total of each kind of premium exceeds 1 million won a year, the excess shall be treated as nil.
| Premium | Rate · limit | Maximum credit |
|---|---|---|
| Protection insurance dedicated to people with disabilities (item 1) — a dependant with a disability as insured or beneficiary | 15% · 1 million won a year | 150,000 won |
| Ordinary protection insurance (item 2) — a basic-deduction dependant as insured | 12% · 1 million won a year | 120,000 won |
The maximum credits are our arithmetic (limit times rate). The two limits are “each” 1 million won, so together the credit can reach 270,000 won. Dedicated insurance must be marked as such on the contract or receipt (Decree art. 118-4(1)).
Which insurance counts — Decree article 118-4(2)
- Life insurance
- Accident insurance
- Household non-life insurance covering fire, theft or other losses
- Mutual aid from fisheries co-operatives, credit unions and Saemaul Geumgo
- Mutual aid from the military, teachers’, local administration, police and fire mutual associations
- Insurance or guarantees guaranteeing the return of a housing rent deposit — excluded if the guaranteed deposit exceeds 300 million won
Those set by ministerial ordinance among these qualify, and all must meet paragraph 1’s “maturity refund ≤ premiums” condition, which excludes savings-type insurance. We did not reproduce the ordinance’s detailed list.
By amount — ordinary protection insurance
| Premiums in a year | Working | Tax credit |
|---|---|---|
| 300,000 won | 300,000 × 12% | 36,000 won |
| 600,000 won | 600,000 × 12% | 72,000 won |
| 1 million won | 1 million × 12% | 120,000 won |
| 1.5 million won | Limit of 1 million × 12% (the other 500,000 treated as nil) | 120,000 won |
The arithmetic is ours. If the credit exceeds the calculated tax on wage income, the excess is treated as nil (Act art. 61(1)). Unlike donations, it does not carry forward.
Whose insurance counts
Item 2 covers premiums for insurance with a basic-deduction dependant as the insured. Paragraph 2 of the same article says medical expenses are “not subject to age or income limits,” but the premium paragraph has no such words. So to include a parent’s premiums, the parent reads as needing to be a basic-deduction dependant meeting the age and income tests.
Checklist
- ☐ Protection type? — excluded if the maturity refund exceeds premiums paid
- ☐ Is the insured you or a basic-deduction dependant?
- ☐ Separate 1 million won limits for ordinary and dedicated insurance
- ☐ Rent deposit guarantee fees — deposits of 300 million won or less · jeonse fraud prevention
- ☐ No carry-forward for amounts over the limit
Questions that remain
We both work — can I claim premiums I pay for my spouse?
Item 2 says premiums for insurance “with a basic-deduction dependant as the insured.” If your spouse is not your dependant because of the income test, premiums insuring your spouse read as falling outside this box.
Does car insurance count?
Items set by ordinance within “household non-life insurance” in Decree item 3 qualify. For a specific policy, check whether it appears as protection-type in the simplified year-end data.
Sources
- Income Tax Act [in force 1 Jul 2026] [Act No. 21221] — original text (checked 30 September 2026). Source for article 59-4(1) (12%, 15%, 1 million won each) and (2) (the no-age-or-income wording for medical expenses), and article 61(1).
- Enforcement Decree of the Income Tax Act [in force 1 Jul 2026] [Presidential Decree No. 36343] — original text. Source for article 118-4 (dedicated marking, six insurance types, 300 million won deposits).
- Our own working. Credits by amount and the maximum credits are our arithmetic.
Where to check further
- Premium records — Hometax’s simplified year-end settlement service.
- Medical and education expenses — medical and education tax credits.
Written on 30 September 2026. Articles are from the National Law Information Center; the tables and arithmetic are ours.
