Medical Insurance

At some point in our lives, we will all need to have a medical procedure. Medical debt can be quite a big burden on us and our families. In fact, in 2016, 14.3% of participants in AKPK’s debt management programme defaulted on their debt because of medical expenses. So how can you protect yourself and prevent this from happening to you?

The answer is medical insurance! It covers the cost of medical treatment that we may not be able to afford on our own. With so many different products out there, you can always find an insurance policy that is affordable and can meet your needs.

Summary

What is medical insurance?
Why is it important?
When should I get medical insurance?
What are the types of medical insurance available?
What should I look out for when picking a medical insurance policy?
What are the costs involved?
How do I choose what medical insurance to buy?
Additional things to look out for

MEDICAL INSURANCE

What is medical insurance?

A medical insurance policy is generally designed to cover the cost of medical treatment, such as the cost of hospitalisation and healthcare services, if you’re diagnosed with illnesses or need to be treated after having an accident.

The coverage (what the insurance company will pay for) is provided by a licensed insurance company, and you have to pay premiums to the insurance company for this coverage. You can buy medical insurance policies through insurance agents or brokers or online.

Why is it important?

Medical treatment can be very expensive and if you want to seek treatment in a private hospital (the main benefit is shorter waiting times), you’ll need to pay a lot of money.

While the public healthcare system is paid for by the Government and is provided at a low cost, there are also certain types of treatments or surgeries that are not fully subsidised by the public healthcare system.

So if you don’t have any medical insurance, it’s easy to find yourself with a crippling amount of medical debt, and seemingly no way out of the mess.

Note: Some of us may be getting insurance coverage through a group plan at work. You should get the details of your work insurance policy. Look out for terms specifying:

What will happen to the insurance policy if you leave your job
The annual limits under the insurance policy
Opportunities to use your personal insurance scheme together with your employer’s group insurance policy

When should I get medical insurance?

It’s better to get medical insurance while you are young and don’t have any pre-existing medical conditions. Insurance companies would usually exclude any existing medical conditions from your insurance coverage or may charge you higher premiums.

Generally, you should get medical insurance once you have a full-time job and earning a regular salary.

What are the types of medical insurance available?

There are four main types of medical and health insurance policies:

Hospitalisation and surgical insurance takes care of hospitalisation and surgical expenses incurred due to illnesses covered under the policy.
Critical illness or dread disease insurance provides you a lump sum (one–off) benefit upon diagnosis of any of the specified 36 critical illnesses or dread diseases.
Disability income insurance provides an income stream if you are unable to work due to sickness or injury. This is normally a portion of your pre-disability income.
Hospital income insurance pays you a sum of money on a daily, weekly or monthly basis if you have to stay in the hospital due to illness, sickness, or injury. Of course, there is an annual limit on how much you can claim.

An insurance company may offer you these products individually or in combination. Always have a proper discussion with your insurance agent or broker to figure out which policy or combination would suit you best.

What should I look out for when picking a medical insurance policy?

You should be aware of what will be covered under the policy, the various terms and conditions, as well as the cost of the insurance cover. Here are a couple of important things to watch out for:

Exclusions

These are medical conditions that are not covered by your policy. It is always best to look at the policy contract for the full list of exclusions and the specifics of each exclusion. Some common exclusions include:

Pre-existing conditions
Specified illnesses
Qualifying/waiting period

Limits

This refers to the maximum amounts that you will be able to claim from the insurance company.

A lifetime limit refers to the overall limit covered by your policy during your lifetime. Once your lifetime limit is exhausted, any further medical costs will no longer be covered.

Annual limits, on the other hand, refer to the amount that you can claim in one policy year. You would have to cover any costs that exceed your annual limit from your own pocket. Unlike the lifetime limit, the amount you claim in one year does not affect the following year’s limit.

Renewability of your policy

There are insurance policies with guaranteed renewals and non-guaranteed renewals. For policies with non-guaranteed renewals, the insurance company can deny the renewal of your policy (the insurance company will make this decision based on your medical history and claims record). Depending on your medical history at the time, it may then be difficult for you to purchase a new policy as you would already have a pre-existing condition.

Even for policies with guaranteed renewals, the insurance company may decide to renew your policy with a higher premium. However, any increase in your premium or a decision to not renew your policy will require an explanation from the insurance company.

What are the costs involved?

Insurance premiums
Premiums are charged either monthly or annually by your insurer in order to maintain your policy. The amount you pay depends on several factors including your age, previous medical conditions, family medical history, whether or not you are a smoker, and of course, the level of coverage of your policy.

You’ll find the table of premiums of an insurance policy in its Product Disclosure Sheet (PDS).
Additional costs during treatment/hospitalisation
In addition to the premiums you have to pay, some insurance plans may not fully insure you against all costs. So there may be some other costs involved when you make claims to your insurance provider for your medical expenses.

The specifics on which costs impact you will depend on your specific insurance policy. Here are some common terms that you will need to understand:

i) Deductible: This term refers to the amount that you’ll have to cover before your insurance provider will start to pay for your treatment.

ii) Co-pay : This is the percentage of the medical costs that you will still have to pay for. For example, your policy might have a co-pay of 20% and your medical bill may come to RM1,000. In this case, your insurer would only pay RM800 of your bill and you would have to cover the remaining 20%.

How do I choose what medical insurance to buy?

Choosing a medical insurance policy can be really tricky when we’re faced with so many options. Here’s a quick checklist to help you decide which medical insurance policy is best suited for you.

Know what type of insurance you are looking for
- What is your current situation? If you have a family and dependants, then you might need a critical illness cover or disability income cover. If you are single, then you might consider taking just basic hospitalisation and surgical cover
Only choose plans with premiums you can afford
- Make sure you can afford the premium payments because failing to make your payments on time will cause your insurance to lapse (or cancelled), leaving you with no coverage
- The younger you are, the less your premiums will be. You will then need to pay more as you grow older
As far as you can afford, choose the plans with the highest annual and lifetime limits
Have a look at your insurer’s list of panel hospitals
- It is easier to process your insurance claims if you go to a Panel hospital
- Make sure your insurer has a wide network of Panel hospitals, which include hospitals of your choice
Choose a plan with a payment structure that you are comfortable with
- Make sure the plan you choose has a deductible and co-pay policy that you can live with
- Opt for a plan with lower out-of-pocket costs if you aren’t comfortable with higher deductibles and co-pays should you fall ill
- Remember though, this might mean that you will have higher monthly premium costs (there’s always a trade off!)
To be safe, get a policy with guaranteed renewal
Look at the room & board limits in your policy
- Medical insurance policies usually limit how much you can claim for room & board when you are hospitalized
- The higher the room & board limit, the higher your premium. So choose a policy that you can afford
Look at the guaranteed renewal age for the coverage
- Policies usually cover you up to a certain age. For example, some could be up to up to 80 years,
- Make sure you choose one that offers long enough coverage so that you can stay protected even into old age

Additional things to look out for

Know your claims procedure
You should always be aware of your insurer’s claims procedure. You might need to check with the insurance company if a particular treatment is covered by your policy. You might also need to get your doctor to fill up and sign off on a claims form. Some hospitals may also have agreements with your insurance company to get your medical bills paid directly by the insurer.
Be accurate when filling out your forms
Your policy may be terminated or cancelled if your insurance provider spots inaccuracies or important medical information that you intentionally left out (non-disclosures) when you first provided your information to them.
Buy your insurance from a licensed insurance agent or broker
You can purchase a medical insurance policy through a licensed insurance agent or broker. But make sure you do your homework carefully before making a decision. Don’t just rely on the advice of the insurance agent as they are trying to sell a product to you and make a commision from it.

Read our article on Practical Advice for more help and guidance.

Additional resources

To help you compare policies and keep track of important details, we’ve prepared a quick template for you to fill up as you conduct your research.

Insurer & Policy	Insurer: Policy:	Insurer: Policy:	Insurer: Policy:
Quoted Premium
Policy Term
Coverage
Stated Exemptions
Optional Riders
Other ‘Catches’
How to Buy