Monday, March 9, 2015

How to choose health insurance or medical card?

Insurance always comes at a costs and there is no best insurance so to speak. Most importantly, buy by your own budget and not the agent's budget as insurance is a lifetime commitment. 

You may gradually increase the coverage as your income improves. However do note that you can only upgrade the plan if your health permits.

There are few things that the readers may need to be aware, especially when choosing a medical card, for a lifetime protection.

  1. Annual Limit
    The annual limit is more important than the lifetime limit as it denotes how much a person can claim in a policy year. A 30 days Intensive Care Unit (ICU) due to coma or stroke in a private hospital can costs RM100K or more.

    If the person has RM50K annual limit, the insurer is only liable to pay up to RM50K per policy year. Another RM50K will have to be paid by the policy holder.

    Suppose the person buys a medical card at age 20 with an annual limit of RM50K. The question is, would the amount of RM50K is still relevant when the person is age 50?

    Tip: Look for plans that does not have any Annual Limit or at least waive the annual limit, to plan ahead.

  2. Lifetime Limit
    The Lifetime Limit is the limit that the policy holder can claim. Once the lifetime limit has been exceeded, the medical plan will cease coverage.

    Tip: Where possible, look for plans that does not have lifetime limit or at least plans that are able to cater for the next 5-10 years medical inflation.

  3. Cancer Treatment & Kidney Dialysis
    Not many are aware that for Cancer Treatment or Kidney Dialysis is an OUTPATIENT procedure. This means that the client is needed to pay first and claim later.

    Tip: Check if the plan covers TAKE HOME DRUGS, LONG TERM MEDICATION & CONSULTATION CHARGES. It is rather pointless to have a high annual/lifetime limit if it excludes the take home drugs, long term medication & consultation charges, no?
  4. Full Claim, Co-Insurance & DeductibleGet accustomed to whether the plan is able to be claim in full, or you will have to pay certain excess.

    Tip: Do not be put off with plans that needs the client to pay excess. As you may already know having the insurer to bear all the risk means transferring higher risk to the insurer. By agreeing to pay the excess, the policy holder is transferring lesser risk to the insurer, hence a lower insurance charges will be imposed.

    It is not everyday that one needs to be admitted and if the policy holder is able to absorb more (during hospitalization), it will help to save on the insurance charges resulting in lower insurance premium.

    In short, plans that are full claim, the policy holder is already paying the 'excess' upfront.
  5. Guaranteed Renewal
    Always check to ensure that the plan is NON-CANCELLABLE, irrespective of how much has been claimed (as long as the policy holder does not exceed the lifetime limit).

  6. Covered Term (70, 80, 90 or 100?)
    If possible, try to get covered until age 80 or more (if you are able to afford).

    The retirement age in Malaysia is generally at age 60, whereby one will lose the company health insurance coverage and one will have to rely on their own personal medical card. 

    Tip: The annual & lifetime limit plays an important role as we do not want to be 'medically bought out' once we are retired with no company medical coverage.

    Do note that the insurance charges will increase as we get older. The premium will also needs to be paid until the end of the tenure. Hence it is vital to plan ahead for some savings in order to pay off the higher insurance charges at later years.

  7. Insurance Charges
    Insurance is about risk transference or risk sharing. Let it be known that the insurance charges is relative to the 'risk' being insured and the insurance charges will increase as we get older.

    The insurance charges is NOT GUARANTEED and in general the insurer reserves the right to increase the insurance charges should the claims for that plan exceeds its threshold.

    Tip: Therefore, plan upfront and be prepared to fork out more as the insurance charges increases. For plans that has cash value, do get to know how much cash values is in the policy.

Remember, as we get older, and with illnesses slowly creeping it, it will be harder to upgrade/extend the coverage